John Lewis boss sacked following poor Christmas sales

Managing director shown the door shortly after major management restructure

Company suffered its first ever half-year loss in 2019 (Reuters)

The future of John Lewis and Waitrose was thrown into chaos on Thursday, as the managing director of John Lewis was sacked and the chair warned that staff may miss out on a bonus.

Paula Nickolds, who has been with the employee-owned retailer since 1994, leaves just three months after the managing director of Waitrose, Rob Collins, also stepped down following a major restructuring.

John Lewis Partnership chair Sir Charlie Mayfield is also quitting – having announced his departure in November 2018 – and will be replaced next month by outgoing Ofcom chief Sharon White.

Ms Nickolds’ departure comes as the department store revealed a 2 per cent like-for-like sales slump in the seven weeks to 5 January. She declined to comment.

She was supposed to become the new executive director of brand – overseeing both divisions of the partnership – in a newly created role which she was due to take up in February.

Sir Charlie said: “After some reflection on the responsibilities of her proposed new role, we have decided together that the implementation of the future partnership structure in February is the right time for her to move on and she will leave the partnership with our gratitude and best wishes for the future.

“At the full year, we expect profits in Waitrose & Partners to be broadly in line with last year. In John Lewis & Partners we will reverse the losses incurred in the first half of the year, but profits will be substantially down on last year. We therefore expect that partnership profit before exceptionals will be significantly lower than last year.”

Former managing director Paula Nickolds (PA)

He added: “The partnership board will meet in February to decide whether it is prudent to pay a partnership bonus.

“The decision will be influenced by our level of profitability, planned investment and maintaining the strength of our balance sheet.”

In March last year, the company revealed that staff bonuses for the employee-owned retailer would be just 3 per cent of annual pay – the lowest level since 1953 – after profits fell 45.4 per cent to just £160m.

Gross sales at the partnership in the seven weeks to 4 January were down 1.8 per cent compared with last year at £2.2bn. Waitrose saw a 1.3 per cent fall in sales, due to store closures, but was up 0.4 per cent on a like-for-like basis.

But at John Lewis there was a 2.3 per cent fall in sales – or 2 per cent on a like-for-like basis – with electricals and home furnishing sales both down heavily. They fell 4 per cent and 3.4 per cent respectively compared with a year ago.

Sir Charlie added: “We saw significant variation in levels of demand, with Black Friday sales up 10 per cent on the equivalent period last year, followed by more subdued demand in the subsequent weeks.”

But most concerning for the employee-owned business is the collapse in profits at the partnership, with the chairman warning that “profits will be substantially down on last year”.

There was some growth, with beauty sales up 4.7 per cent and fashion up 0.1 per cent, while at Waitrose online orders and basket sizes increased 23 per cent in the seven days leading up to Christmas compared with last year.

However, John Lewis could only manage a 1.4 per cent increase in online sales, meaning the group overall saw an online uptick of 16.7 per cent in total.

Reacting to the news, Richard Lim, chief executive of Retail Economics, said: “Excitable Edgar did little to fire up Christmas sales, with declines across non-food and a woeful performance in the online business, which barely showed any signs of growth.

“The later timing of Black Friday may ultimately have been the destructive force at play. Consumers appear to have pulled forward gift purchases to take advantage of deep discounts at the expense of Christmas trading.”

John Lewis and Waitrose have had a difficult few years, with former bosses Andy Street and Mark Price leaving at similar times. Both have gone on to pursue careers in politics.

Ms Nickolds joined John Lewis in 1994 and worked her way up through the ranks to the position of managing director.

Just last October, in a major overhaul of the business structure, she was unveiled as the new head of brand for both businesses, with Waitrose boss Mr Collins also stepping down.

The £100m cost-cutting exercise also saw 75 out of 225 head office roles axed, as the company attempted to recover from its first ever half-year loss in September.

Press Association