“Over the last five years we’ve had events happen every once in a while,” she says, sipping tea in the restaurant of Peter Jones, the John Lewis department store that invites the well-heeled shoppers of Sloane Square, Chelsea, to reflect on some middle class household items.
“We’ve had the pandemic and we’ve had inflation at levels we haven’t seen since the 1970s. We got through this as a partnership, with all the benefits of the partnership – transparency, service, long-term focus – remaining intact.
“I would say this is a turning point. Some of the tough decisions we’ve made over the past year mean we’re now generating more cash as a company.”
Early next year, John Lewis will use some of the cash it now generates to pay off a £300 million bond debt, part of the legacy of its perhaps reckless expansion in the 2010s. putting the country in its best debt position in 21 years.
“We are back on the right track and much better prepared for the future. This is a launching pad for the next phase of growth for the company and, to be honest, we are in as solid a position as we can possibly get in the five years we have had.”
John Lewis is an unusual animal. Dame Sharon likes to remind people that its mutual structure, in which employees are partners in the business, was created as an “alternative to communism”.
“The partnership is almost separate from the rest of the business world,” she adds. “We are almost more in the posture of the BBC or the NHS as a national institution because people feel they have a stake.”
The John Lewis Constitution prohibits the maximization of profits, which is a requirement for ordinary capitalist enterprise. There is some irony in this, as the partnership is more dependent on its profits than a company that can turn to shareholders for financial support in a crisis.
“The partnership model was never in question,” insists Dame Sharon, who considered bringing in outside funding in a way that could have maintained John Lewis’s mutual status but would nevertheless have been highly controversial for staff.
“The question is about how you finance your growth. The simplest thing is that you generate your own money by trading.”
So it is a big problem to be in the black again. Particularly for Waitrose, which has suffered from the brutally competitive supermarket market with tired stores in which it has failed to invest properly, this should be transformative in the coming years, says Dame Sharon.
“I’m looking forward to what Waitrose will do over the next two to three years,” she says.
“The most important thing is that we now have the money to invest in the future of the company. About the two brands [John Lewis and Waitrose] Last year we generated around £210 million more, meaning we have the money to invest in growth this year.”
Around 80 Waitrose stores will be upgraded over the next three years. The Sudbury, Suffolk branch (“a very picturesque part of East Anglia,” says Dame Sharon) was the first to get the treatment with a new layout and technology.
The main Waitrose in Hampstead is next.
“We started thinking about how we can find the right balance between service and productivity,” says Dame Sharon. “You won’t see Waitrose stores completely stripped of partners and relying on self-checkout.”
It’s somewhat too late. A wealthy American technology executive who recently moved back to Britain after seven years was struck by the shabbiness. ‘What on earth happened to Waitrose?’ she asked at an industry dinner.
Meanwhile, Marks & Spencer is enjoying a revival and expanding its grocery business as it chases the crown of grocer to central England. CEO Stuart Machin recently told The Telegraph that he hoped to have increased Waitrose’s market share by now.