John Lewis withholds fifth of service charge payments to landlords as costs escalate

Move affects about 20 out of company’s 50 department stores in shopping centres

(Getty)

John Lewis has told its landlords it will withhold 20 per cent of the service charges owed for this quarter, affecting about 20 out of its 50 department stores in shopping centres, a spokeswoman said.

The retailer said the charges - which come on top of rent and include services such as heating, cleaning and security - rose 20 per cent over the last three years.

“These continued increases are simply not acceptable, particularly in the absence of strenuous efforts by landlords to work collaboratively with us to reduce these costs,” John Lewis said in a statement on Friday.

“We are investing more in our current shop estate than ever before to do everything we can to encourage customers and grow footfall to our shops and we hope that our landlords will support us in continuing to do this.”

The bold cost-cutting move comes a few days after John Lewis Partnership announced a major internal reorganisation aimed at saving around £100m.

The company, which includes John Lewis department stores and Waitrose supermarkets, reported a large loss in the first half of its financial year, as costs surged and sales fell.

The troubles at John Lewis, traditionally seen as the bellwether of British retail, are part of wider malaise on the country’s high streets, as online retailers steal business and consumers grow more cautious ahead of the looming Brexit deadline.

Sales at high street shops across the UK fell over 3 per cent last month compared with a year ago, marking the worst September for eight years, new figures showed on Friday.

John Lewis’s rival department store chains, Debenhams and House of Fraser, have already buckled under the pressure of dwindling sales and rising costs.

Debenhams went into administration in April, while House of Fraser was bought out of administration last year.