John Lewis ‘risks turning into another Debenhams’ if it scraps staff ownership model, activists say

John Lewis risks becoming ‘just another Debenhams of Sports Direct’ if it scraps its cherished staff ownership model, campaigners fear.

The 158-year-old retailer is currently owned by its 74,000 employees, meaning it’s run for their benefit.

But chairman Dame Sharon White is considering a plan to sell a minority stake in the group, which also owns Waitrose. She wants to raise a whopping £2bn to invest in the struggling company to make it sustainable again.

It’s struggling with a slowdown in the high street – as shoppers increasingly move online – and bleeding for cash due to the pandemic and the rising cost of living.

But the move – which would attract outside investors for the first time in more than 70 years – would be a dramatic change for John Lewis. An amendment to the company’s bylaws would be necessary to water down the mutual status.

John Lewis opened his first store on London’s Oxford Street in 1864. It now has 34 department stores across the country and 332 Waitrose supermarkets.

The company’s partnership structure has seen it hailed as the ideal employer, with then Deputy Prime Minister Nick Clegg saying in 2012 that it should be the model for the whole economy.

And in January, White, who has been in charge since 2020, said the company is focused on “making the world a happier place” rather than profit maximization. She said values ​​remain an integral part of the group.

John Lewis needs up to £2 billion to invest in technology and data analytics, as well as the Waitrose supply chain, the Sunday Times reported.

It cannot raise money from staff and is limited in how much it can borrow, as it is currently £1.7bn in debt.

Mutuo’s Peter Hunt said a change in the partnership model would “just make it another Debenhams, or Sports Direct or something like that.” He added: ‘Ultimately, ownership of their employees makes them different and that’s why people like them’

Hunt warned that John Lewis could raise as much as £2bn, which would mean almost half of the company could end up in the hands of an outside investor.

Labor MP Gareth Thomas, chair of the parliament’s mutuals party group, said the plans were “deeply concerning”.

Mutuo’s Peter Hunt said a change in the partnership model would “just make it another Debenhams, or Sports Direct or something like that.” Pictured: File image of the Worthing Debenhams store

He said: “If John Lewis were to lose mutual status, it would be devastating to both staff and families across the country who have nurtured the company for decades.

“Staff ownership is what makes John Lewis special, and it would be a sad state of affairs if that were to change.”

Thomas and Hunt said the change wouldn’t be necessary if it allowed the company to raise money without employees losing control.

Thomas said: ‘Ministers could avoid this with new laws allowing companies like John Lewis to raise money without having to give up their mutual status.

“If the political will was there, this could be resolved and John Lewis’ mutual status could be saved.”

John Lewis insisted the plans were not about scrapping mutual status. But a spokesperson said: ‘We have always said we would seek partnerships to help fund our transformation and exciting growth plans.

“Our Partners, who own the company, will be the first to know about any developments.”