“We’ve had a once-in-a-generation event in the last five years,” says Peter Jones, sipping tea in the restaurant of John Lewis, which invites well-heeled shoppers from Chelsea’s Sloane Square to consider some middle-class homewares.
“We’ve had a pandemic and we’ve had inflation at a level we haven’t seen since the 1970s. We achieved this as a partnership with all the benefits of a partnership – transparency, service, long-term focus – intact.
“I would say it’s a watershed moment. Some of the difficult decisions we’ve made in the past year mean we’re now generating more cash as a business.”
Early next year, John Lewis will use some of the cash it is now generating to pay down £300m of bond debt, part of the legacy of an arguably reckless expansion in 2010. This will leave it in its best debt position for 21 years.
“We are back on track and much better prepared for the future. This is the springboard for the next phase of the company’s growth and, frankly, we’re in as strong a position as we could possibly be in the five years we have.”
John Lewis is an unusual animal. Dame Sharon likes to remind people that her mutual structure, where employees are business partners, was created as an “alternative to communism”.
“Partnership is almost different from the rest of the business world,” he adds. “We are almost more in the mode of the BBC or the NHS as a national institution because people feel they have a stake.”
The John Lewis Constitution prohibits profit maximization, a requirement for ordinary capitalist enterprises. There was a certain irony in this, since a partnership is more dependent on its profits than a business, which can turn to shareholders for financial support in a crisis.
“The partnership model was never challenged,” insists Dame Sharon, who considered bringing in outside cash in a way that could preserve John Lewis’ mutual status but still be highly controversial for staff.
“The question is how do you finance your growth. The easiest way is to generate your own money through trading.”
So being back in the black is a big deal. The next few years should be transformational for Waitrose in particular, which has suffered in a brutally competitive grocery market with tired stores it has been unable to properly invest in, says Dame Sharon.
“I’m looking forward to what Waitrose will do in the next two to three years,” he says.
“The big thing is that we now have cash to invest in the future of our business. Across two brands [John Lewis and Waitrose] We generated around £210m more last year, which means we have cash to invest in growth this year.”
Around 80 Waitrose stores are scheduled to be upgraded over the next three years. The store in Sudbury, Suffolk (“a very picturesque part of East Anglia”, says Ms Sharon) was the first to get the treatment with the new layout and technology.
Next is the main Waitrose in Hampstead.
“We started thinking about how to strike the right balance between service and productivity,” says Dame Sharon. “You won’t see Waitrose stores completely stripped of partners and relying on their own tills.”
It is somewhat overdue. One wealthy American tech executive who recently moved back to the UK after seven years was struck by the sleaze. “What the hell happened to Waitrose?” she asked at the industrial dinner.
Meanwhile, Marks & Spencer is enjoying a resurgence and expanding its grocery business as it chases the grocer’s crown in Central England. Chief executive Stuart Machin recently told The Telegraph that he hoped to overhaul Waitrose’s market share as early as now.