John Lewis to become major housebuilder in £300m overhaul

Partnership plans to build homes at 20 of its sites across the UK

John Lewis at Westfield shopping centre (Getty Images)

John Lewis is set to become a residential landlord as part of a major overhaul that will see the department store chain cut £300m of costs and diversify beyond traditional retailing in response dire trading on the high street.

The partnership plans to build rental homes at 20 of its sites across the UK, offer more financial services to customers, invest £1bn in its online operations over the next five years and expand Waitrose's rapid delivery service through Deliveroo.

It also wants to improve its environmental impact by offering products that can be rented or sold back to the company. The famous “never knowingly undersold” pledge will be replaced with a different “value for money” offering, to be decided next year.

John Lewis said it was making the moves because retail profits alone will no longer be sufficient to "pay the wages we would like, or invest in our customers and communities”. It is hoped new areas of business will account for 40 per cent of profits by 2030.

Last month, the company announced plans to shut eight John Lewis stores and four Waitrose stores with the loss of over 1,400 jobs.

Staff were told they would not receive a bonus for the first time since 1953 after the group fell to a £630m loss and a wrote down the value of its stores by £470m amid falling sales and a weakening outlook for retailers.

On Friday, it said it plans to restore the bonus once its annual profits return to £150m. The company has set a target for profits to reach £200m in the next two years and £400m by 2025.  

John Lewis Partnership chairwoman Sharon White said: "We've seen five years of change in the past five months, and Waitrose and John Lewis have responded with great agility.

"Our plan means the John Lewis Partnership will thrive for the next century, as it has the last.

"We're adapting successfully to how customers want to shop today, while showing the partnership is improving lives and building a more sustainable future.

"We'll share our success with our customers, partners - who own the business - and our communities."