After posting huge losses, Sharon White has rung the changes, promising more cuts. Even its hallowed mutual status is under review

It’s hard to sugar-coat the disastrous JLP results last week, as it fell to a £234m loss in the year to 28 January, driven largely by a 3% fall in Waitrose sales. So, what’s gone wrong? What’s it doing to fix it? And will it work?

Waitrose’s troubles long pre-date the cost of living crisis. Even before the pandemic, JLP was milking the Waitrose cow for years, allowing prices to drift ever higher, and the Covid surge in online orders, which saw Waitrose sales increase 10% to £7.5bn, were a salvation for the department store.

As online sales unravel, however, there’s been no hiding place from the cost of living crisis, with costs soaring by almost £180m across the group, while Waitrose store valuations have been written down by £150m.

Helpfully Waitrose is just under three years into a transformation plan, under its ‘lean, simple, fast’ framework, focused on cutting costs, restructuring teams and optimising ranges. That enabled executive director James Bailey to invest £100m in price cuts in February.

“The financial position of the group is actually very robust”

But many feel this was too little, too late. While arch-rival M&S has been touting its ‘Remarksable Value’ for four years, Waitrose has continued to market its quality and values credentials with ‘food to feel good about’ messaging, with the business finally announcing a review of its creative agency roster in February.

“They’ve been very slow to react to the cost of living crisis,” says an ex-Waitrose director of the recent price cuts.

Nor are the cuts enough, says Paul Stainton, UK partner at private label consultancy IPLC.

In Waitrose’s value tier Essentials range, “many of the retail prices are still way above the equivalent product elsewhere”, he notes. “A great example is flour. The Waitrose Essential price is 75p, nearly 30% more than all their competitors, who are selling at 58p.”

Waitrose Image

Waitrose ended its tie-up with celeb chef Heston Blumenthal


At the same time, Waitrose has let its traditionally high store standards slip, says Savvy Marketing CEO Catherine Shuttleworth.

“Its retail standards aren’t good enough and its colleagues look lost. Go across the road to Aldi and the colleagues are filling up the shop, they’ve got purpose, they’ve got meaning. And it looks neat and tidy.”

Cuts in store staff levels have been compounded by wider supply chain shortages, though Waitrose says availability is “north of 96%, which is almost unheard of, says a source.

“There is still a supply chain issue,” counters Shuttleworth. “They say they’ve resolved it but there’s either too little or too much.”

Efforts to simplify the range, avoiding duplication and minimising single facings, are ongoing under commercial director Charlotte Di Cello, who is praised by the ex-Waitrose director for “instilling a performance culture.”

But the innovation pipeline is not what it once was, says Shuttleworth. Earlier this month, Waitrose ended its tie-up with celeb chef Heston Blumenthal to focus on its premium own-label No1 range. But whereas “they used to be the home of innovation – them and M&S”, now M&S is out in front.

M&S posted 6.3% like for like food sales growth in its Q3 covering Christmas – though sales from its jv with Ocado are not included, which makes comparisons harder.

Waitrose price cuts 3

Waitrose announced a £100m price investment in February focused on Waitrose Essentials

One area where M&S is unquestionably ahead is in modernising its store estate, opening ‘bigger and better stores’ in its store renewal programme. “M&S’s stores are a joy to shop in,” adds Shuttleworth.

In contrast the “Waitrose store estate is looking shabby”, she adds. And while senior execs acknowledge investment is needed, the case for a return on investment from wholesale store refurbishment are unproven, with an overhaul of its antiquated IT systems felt more likely to deliver quick returns.

After seeing food to go sales increase 32% , Bailey also wants to expand Waitrose’s network of convenience partnerships, including outlets in Dobbies Garden Centres and Shell forecourts, an area where M&S, with hundreds of BP franchises, not to mention travel hub stores, has helped broaden its customer base.

Deeper cost cuts are also planned. JLP chairman Sharon White has targeted £900m of efficiencies by 2026, up from £300m. And to help she’s brought in Nish Kankiwala, a seasoned private equity operator from his time as Hovis CEO and Burger King president, who had been a non-executive director on the partnership’s board.

Independent retail analyst Nick Bubb says: “Everybody knows the cost base of JLP is too high, and I suspect he will be forgiven for cutting costs [and axing jobs] if enough profits return to pay a bonus again.”

A senior City source believes Kankiwala’s fmcg experience “will be good for Waitrose”. “He’ll understand how fmcg ticks and the importance of volume” But more broadly, “they have got to put management in place that absolutely understand food retail.

“That’s what they’re missing. Sharon White [previously Ofcom CEO] hasn’t got any retail experience. They need a great retail director. And specifically for Waitrose, there is a need to put some strong retail and supply chain experience in there.”

However, recent hires suggest Bailey is building a team with strong credentials, including retail director Tina Mitchell (ex Co-op and Tesco), chief marketing officer Nathan Ansell (ex M&S), as well as Barry Fine, Di Cello and Bailey himself (ex-Sainsbury’s). And JL retail director Naomi Simcock recently replaced Pippa Wicks as JL executive director, following the latter’s departure.


“Everybody knows the cost base of JLP is too high”

Mutual decision

As to White, her vow to “focus on the preservation of the Partnership model and our distinctive character, on the strategy for the Partnership and our big commercial choices”, contrasts strongly with reported plans to sell a stake in the hallowed mutual to investors. In a LinkedIn post on Wednesday, White vowed she would ensure “the partnership model not only survives, but thrives for another 75 years”, adding: “if we were to consider working with others that had implications for how we’re set up, we’d of course discuss it with our Partners first.”

The City source questions the need for such a move, noting that liquidity at the year-end remained strong at £1.5bn, including £1bn cash and short-term investments and access to undrawn bank facilities of £420m.

“The financial position of the group is actually very robust. It has lots of liquidity. It is a phenomenal model,” he says.

“I can see and understand why they may want to give themselves more flexibility but if you look back, they traded well through Covid and, even though the world is still uncertain, they are actually well financed.

“So, if they are thinking of getting access to equity there are other ways of doing it. It doesn’t feel like this is a move because everything is really tough, it seems more because they may want to be more aggressive in terms of investment and growth.”

But the source also thinks reports may be somewhat “premature and overblown”.

Nevertheless, the investor appetite would be there if they did go down that route. “It’s an amazing brand, amazing business, a great structure. They will be very appealing.”