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John Lewis to withhold service payments as it seeks fee cuts from landlords

The retail giant said service charge increases from landlords have been ‘simply not acceptable’.

John Lewis has criticised landlords for service charge increases as it seeks rent reductions (Kirsty O’Connor/PA)
John Lewis has criticised landlords for service charge increases as it seeks rent reductions (Kirsty O’Connor/PA)

By Henry Saker-Clark, PA City Reporter

John Lewis is putting pressure on its landlords to reduce fees in a bid to cut costs, as the high street downturn continues to weigh on retailers.

It is understood that the company has been informing landlords in some locations that it will withhold 20% of this quarter’s service charge as it seeks reductions.

The retail giant said service charge increases from landlords have been “simply not acceptable” and have resulted in the high street firm doing “everything we can to reduce our cost base”.

The retailer also admitted there has an “absence” of efforts by landlords to work collaboratively to reduce costs.

However, the move to withhold a fifth of service charges, which was first reported by the BBC, could result in legal action by property owners to recover any unpaid money.

Over the last three years we have seen an increase in service charges of 20% and these continued increases are simply not acceptable John Lewis

The service charge fees – which John Lewis said have risen 20% over the past three years – are fees retailers pay on top of rent to cover services such as heating and security.

A John Lewis Partnership spokeswoman 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.

“We are investing more in our current shop estate than ever before to do everything we can to encourage customers and grow footfall, and we hope that our Landlords will support us in continuing to do this.”

The calls for fee reductions come days after John Lewis announced plans to cut around 75 office roles as part of a major restructuring planned to reduce costs by around £100 million.

The retailer announced that Rob Collins, managing director of its Waitrose business, will leave the company as part of the move, which will bring its department stores and supermarket under the same management team.

PA

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