The John Lewis Partnership is encountering significant hurdles in making its flagship property scheme profitable.
- The development plan includes building 781 new flats above two Waitrose locations in West Ealing and Bromley.
- There is a strategic aim to integrate 35% affordable housing within the development projects.
- Financial assessments reveal a potential negative return of £57 million, highlighting profitability concerns.
- Current evaluations suggest the project’s worth may fall short of its £240 million construction cost.
The John Lewis Partnership is experiencing formidable obstacles in its ambitious property development projects, raising concerns over their viability. The scheme involves constructing 781 residential flats in total, specifically 428 above a Waitrose store in West Ealing and 353 in Bromley. There is an expressed intention to ensure that 35% of these properties are categorized as affordable housing, reflecting a significant commitment to community and social responsibility.
However, financial forecasts indicate that these developments may not be economically sustainable. According to the initial analysis performed by Quod, a specialist planning and development consultancy, the projects could culminate in a negative financial outcome. This analysis predicts a deficit of £57 million, a stark contrast to the hoped-for profits, given the developments were valued at approximately £183 million against a projected construction cost of £240 million.
These findings underscore the complexity of diversifying John Lewis’s portfolio beyond its traditional retail operations. The chair of John Lewis, Dame Sharon White, has been steering the company towards generating a substantial portion of its earnings from non-retail avenues by the year 2030. However, this strategic pivot comes at a challenging time for the company, which reported a significant £234 million loss in the previous fiscal year while grappling with considerable debts of £1.7 billion, with an imminent repayment of £350 million due in the next two years.
Despite these financial strains, Dame Sharon White remains committed to resolving the partnership’s profitability issues by 2026. However, she emphasized that achieving this goal might necessitate external investments, considering the current financial conditions.
The John Lewis Partnership’s property scheme highlights the crucial balancing act between strategic diversification and financial viability.
