John Lewis boss survives… but massive revolt casts a shadow

When Sharon White addressed disgruntled partners of John Lewis she quoted writer Vivian Greene to describe the huge challenges facing the employee-owned retailer.

‘Life isn’t about waiting for the storm to pass, it’s about learning how to dance in the rain,’ the beleaguered chairman told staff ahead of last week’s vote of no confidence in her leadership. In the event, White survived to fight another day.

But the partnership’s ruling council of elected members made clear its anger at a third year of losses and the axing of staff bonuses by voting down the performance of the boss of the John Lewis department store chain and Waitrose supermarkets. Just four of the 55 votes from council members showed confidence in the partnership’s progress under her leadership over the past year. The rest ‘disagreed’ or ‘strongly disagreed’.

The vote in favour of White ‘to progress the partnership’ was 42-13 in her favour, however White’s reprieve is likely to be short-lived.

She faces another showdown at the partnership’s council in September. If John Lewis were a normal company, she would be on the rack again at next month’s annual general meeting. But John Lewis is no normal company. The opening line of its constitution says as much: ‘The John Lewis Partnership is not like any other business.’

Neither White nor any of other directors will be up for re-election at the annual meeting.

Partners won’t get to vote on the company’s pay report. White will continue to earn close to £1 million even though her chief executive duties are now carried out by Nish Kankiwala, a former part-time director who, like White, has no direct retail experience.

In fact, partners won’t get to vote at all. Just one shareholder, representing the partnership, will be at the meeting in London to cast their vote. They will be asked only to receive the company’s report and accounts, and approve the reappointment of auditor KPMG. Such rubber-stamping arises because John Lewis is a public company and has a legal requirement to hold an annual meeting.

But its archaic structure means the owners will be denied another chance to vent their frustration. John Lewis lost £234 million last year when White admitted inflation ‘hit us like a hurricane’.

Staff were denied their annual bonus, which has rewarded employees and attracted new recruits since 1920. Debts of £1.7 billion are piling up, with borrowings of £350 million due to be repaid in the next two years.

Even the staff pension fund, which looks after the nest eggs of 74,000 workers, swung into deficit after bets on supposedly safe Government bonds cost it £2.8 billion.

White’s controversial turnaround plan involves investing in buy-to-rent properties and relaunching its credit card, while raising the cost-cutting target to £900 million by 2026. Critics say the plan is doomed.

Struggle: John Lewis lost £234 million last year when Sharon White admitted inflation ‘hit us like a hurricane’

‘They should stick to their knitting but do it better,’ said retail veteran Richard Hyman, who thinks John Lewis should invest in its core retail business instead. ‘Surely that would be less risky and less challenging than going into property and financial services, where I don’t see what they can bring to the party.’

But it was reports that White was considering an end to the 159-year-old group’s treasured mutual status by raising funds from outside investors that really irked partners.

White last week sought to allay those concerns, saying it will always be employee-owned: ‘No ifs, no buts. There is absolutely no question of demutualisation,’ she said. However, she did not rule out seeking ‘external investment’ if her turnaround plan could not be funded ‘through our own means’.

Hyman described last week’s poll as ‘illogical’. He said: ‘To vote for a continuation of the same ‘grass is greener’ approach seems a little perverse.’ He added: ‘I can’t see partners being paid a bonus in the foreseeable future.’

It remains to be seen if opposition to White’s reign escalates as the cost of living crisis bites and shoppers stay away.

One thing is for sure: the storm clouds are gathering for White.

As the saying goes, it never rains but it pours.