Harrods and John Lewis Cut Jobs in Blow to U.K. Retail Industry

(Bloomberg) --

Britain’s retail industry suffered a fresh blow, with two high-profile department stores cutting hundreds of jobs in response to the coronavirus crisis.

Harrods, the luxury emporium, is planning to cull as much as 14% of its 4,800-strong workforce. John Lewis Partnership Plc, a mass-market retailer, said some shops will not reopen following the lockdown and warned that it may not pay a bonus to its employee-owners this year. It would be the first time there was no payout since World War II.

News of the cuts comes amid deeply depressed conditions for U.K. retailers, whose shops were closed for nearly three months as part of the effort to contain the virus. While most stores have been open again since mid-June, lower foot traffic and demand are eating away at profits. Many retailers also face deferred rent and tax payments, as well as higher costs of running stores safely.

In an email sent to Harrods employees, Managing Director Michael Ward said the pandemic and rules on social distancing are “having a huge impact on our ability to trade, while the devastation in international travel has meant we have lost key customers coming to our store.” He said job cuts are necessary, as it will take time and a “drastic improvement in external conditions for our business to recover and return to growth.”

John Lewis Chairman Sharon White told employees there would be job losses following the closure of some stores and one of its London offices, in a letter first reported by the Evening Standard newspaper. John Lewis, which also owns the Waitrose grocery business, has reopened 22 of its 50 stores and announced plans to open 10 more on Wednesday, including its flagship on London’s Oxford Street.

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