John Lewis boss survives… but massive revolt casts a shadow

When Sharon White addressed John Lewis’s disgruntled partners, she quoted writer Vivian Greene to describe the enormous challenges facing the employee-owned retailer.

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

But the partnership’s governing council of elected members made its anger clear at a third year of losses and the abolition of employee bonuses by dismissing the performance of the boss of department store chain John Lewis and Waitrose supermarkets. Only four of the 55 councilor votes expressed confidence in the progress of the partnership under her leadership over the past year. The rest ‘disagree’ or ‘completely disagree’.

The vote for White “to advance the partnership” was 42-13 in her favor, but White’s reprieve is likely to be short-lived.

She faces another showdown on the partnership council in September. If John Lewis were a normal company, she’d be back on the rack at next month’s AGM. But John Lewis is not a normal company. The opening sentence of the articles of association says so much: ‘The John Lewis Partnership is not like any other company.’

Neither White nor any of the other directors will be reelected at the annual meeting.

Partners are not allowed to vote on the company’s payroll report. White will continue to earn close to £1 million, even though her duties as CEO are now handled by Nish Kankiwala, a former part-time executive who, like White, has no direct retail experience.

Partners are not even allowed to vote at all. Only one shareholder, representing the partnership, will be present at the meeting in London to vote. They will only be asked to receive the company’s report and accounts and approve the reappointment of auditor KPMG. Such rubber-stamping arises because John Lewis is a limited liability company and is required by law to hold an annual meeting.

But the archaic structure denies the owners another chance to express their frustration. John Lewis lost £234 million last year when White admitted inflation ‘hit us like a hurricane’.

Staff have been denied their annual bonus, which has rewarded workers and attracted new recruits since 1920. Debts of £1.7bn are piling up, with loans of £350m due over the next two years.

Even the staff pension fund, which cares for the nest eggs of 74,000 workers, ran short after bets on supposedly safe government bonds cost it £2.8bn.

White’s controversial turnaround plan includes investment in rental properties and a credit card relaunch, while raising the cost-cutting target to £900m by 2026. Critics say the plan is doomed.

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

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

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

White tried to allay those concerns last week by saying it will always be employee property: “No ifs, no buts. There is absolutely no question of demutualization,’ she said. However, she does not rule out seeking “outside investment” if her turnaround plan cannot be “self-financed”.

Hyman described last week’s poll as “illogical.” He said: “Voting to continue the same ‘grass is greener’ approach seems a bit perverse.” He added: “I don’t see partners getting a bonus anytime soon.”

It remains to be seen whether opposition to White’s administration escalates as the cost of living rises and shoppers stay away.

One thing is certain: the storm clouds are gathering for white.

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