John Lewis says service charge rises ‘unacceptable’ as it tries to cut costs | Business News


John Lewis has told some landlords it will withhold 20% of this quarter’s service charge, it is understood.

The news comes as the retailer tries to slash costs, recently announcing plans to cut around 75 office roles as part of a major restructuring.

John Lewis has criticised landlords for rises in service charges that are “simply not acceptable”.

A John Lewis Partnership spokeswoman said: “At a time when we are doing everything we can to reduce our cost base, we have unfortunately been faced with regular increases to the service charges we pay for some of our shops in shopping centres.

“Over the last three years we have seen an increase in service charges of 20% and 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.

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

John Lewis is putting pressure on landlords as it tries to cut costs

The move to withhold a fifth of service charges, first reported by the BBC, could result in legal action from property owners, however.

Service charges are feed paid on top of rent which cover things like heating, marketing, maintenance and security in covered shopping centres, where John Lewis has around 20 stores.

On Tuesday, John Lewis said it was hoping to save around £100m “over time” by shedding a third of its 225 senior executives in a merger of management at its department stores and Waitrose supermarket chain.

The revamp, dubbed the Future Partnership, will see a slimmed down executive team, made up of seven new director roles with responsibilities across the whole group.

As well as reducing costs, John Lewis said the move will also make it more responsive and speed up decision making, allow the two brands to work more closely together and improve its systems by merging IT and supply chain platforms.

Details of the plan come less than a month after John Lewis posted its first half-year loss.


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