Dame Sharon White can reflect that she won the vote that counted. The one she lost – on the John Lewis Partnership’s performance last year – sounds a bit like a relegated football club’s fans wishing the results had been different. Given the £234m pre-tax loss and no staff bonus, a thumbs-down for the business’s performance cannot be called a shock.
The meaningful vote at this week’s meeting of the partnership governing council was on whether the club should stick with its manager, or chair in this case. On that front, the 60-strong body backed White by an undisclosed majority.
Everybody relaxed, then? The partners can make up their own minds but, in their shoes, you’d surely want a clearer explanation of what, precisely, White was ruling out in her robust-sounding defence of John Lewis’s mutual model.
On one hand, she said she was “absolutely categorical” that “the John Lewis Partnership will always be an employee-owned business, no ifs no buts” and “there is absolutely no question of demutualisation”. Great stuff; that will have got them cheering on the terraces and beyond.
On the other hand, White then introduced a significant-sounding “if” when she addressed risks. She said: “If at any point the partnership were unable to fund all our plans through our own means, the board could consider external investment.”
How do these two statements relate to each other? How can there be “no question” of demutualisation if the board “could consider” bringing in an outside investor if self-funding looks dicey?
Does she mean that the sale of, say, a minority stake – which is what the original Sunday Times story said was being studied – wouldn’t count as demutualisation proper because staff would still own the overwhelming majority of the business?
Or is she solely imagining circumstances – less controversial ones – in which an external party could invest in subsidiaries of the partnership? For example, it’s not hard to imagine a deal in which the financial services operation could form a joint venture with a bank. That probably wouldn’t create a fuss. Waitrose used to have an online venture with Ocado, after all.
White, it should be said, also emphasised safeguards around any new proposal. The reference to external investment continued “if and only if the arrangement was consistent, and completely aligned, with the 1929 and 1950 trust settlements” – a nod to the founding documents via which John Spedan Lewis gave the business to staff. And the governing council of elected staff would also play a role.
Yet the core ambiguity surely remains. Does the commitment to employee ownership mean full and undiluted 100% ownership of the actual partnership for ever? Or could, say, a 75% arrangement be deemed compatible with the legally binding documents in some circumstances?
after newsletter promotion
The clearer part is that John Lewis’s plan A is to continue with a self-funding model with no need for drama. And, actually, it stands a decent chance of success if inflation fades and the outside economic weather doesn’t deteriorate. Costs are still being removed and there was £1bn of cash at the last balance sheet date.
Yet White still needs to clear up her communication around alternative scripts. If the categorical commitment is to pure 100% mutuality, why not just say so in terms that leave no doubt?
