Department Stores

John Lewis plans to cut service charge payments to landlords

John Lewis is seeking service charge discounts from some of its landlords to help reduce costs during the upcoming golden quarter.

According to the BBC, the department store chain has been telling landlords in certain areas it has decided to reduce its payment for non-rent items, such as heating, cleaning and security by 20%.

Reports suggest that John Lewis told landlords the price for such services has become “too high” and has asked for some help.

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In a statement John Lewis 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.”

However, John Lewis is contractually obliged to pay service charges under its lease agreements and landlords affected by the decision could take legal action.

The retailer said it has been investing in its current shop estate “more than ever before” and hoped landlords would “support” it in continuing to do so.

The news comes in the same week John Lewis announced a restructuring of its management team in a move designed lead to an overall cost saving of c.£100m over time.

It is anticipated the decision will see a reduction of around 75 senior management head office roles as it moves its supermarkets and department store divisions into one business.

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