“We’ve come through once in a generation events over the last five years,” she says, sipping tea in the restaurant of Peter Jones, the John Lewis department store which invites the well-heeled shoppers of Sloane Square, Chelsea, to consider some middle-class homeware.
“We’ve had the pandemic and we’ve had inflation at a level we haven’t seen since the 1970s. We’ve come through that as a partnership with all the upsides of the partnership – transparency, service, long-term focus – intact.
“I would say it’s a watershed moment. Some of the difficult decisions we took over the last year mean that we’re now generating more cash as a business.”
At the start of next year, John Lewis will use some of the cash it is now generating to pay off a £300m bond debt, part of the legacy of arguably reckless expansion in the 2010s. That will leave it in its best debt position in 21 years.
“We’re back on track and much more fit for the future. This is a launch pad for the next phase of growth for the business and to be frank we’re in as solid a position as we could be given the five years we’ve had.”
John Lewis is an unusual animal. Dame Sharon likes to remind people that its mutual structure, in which staff are partners in the business, was created as an “alternative to communism”.
“The partnership almost sits apart from the rest of the business world,” she adds. “We’re almost more in the mode of the BBC or NHS as a national institution, because people feel that they’ve got a stake.”
The John Lewis constitution prohibits the maximisation of profits, which is a requirement for ordinary capitalistic enterprises. There has been some irony to this, as the partnership is more dependent on its profits than a business which can turn to shareholders for financial support in a crisis.
“The partnership model was never in question,” insists Dame Sharon, who considered bringing in outside cash in ways that could have preserved John Lewis’s mutual status but nevertheless would have been highly controversial with staff.
“The question is about how you fund your growth. The most straightforward is you generate your own cash through trading.”
So being back in the black is a big deal. For Waitrose especially, which has suffered in the brutally competitive grocery market with tired stores in which it has been unable to properly invest, it should be transformative over the next few years, says Dame Sharon.
“I’m looking forward to what Waitrose is going to be doing over the next two to three years,” she says.
“The big thing is we’ve now got the cash to invest in the future of the business. Across the two brands [John Lewis and Waitrose] last year we generated something like £210m more, which means we’ve got the cash to invest into growth this year.”
Some 80 Waitrose stores are scheduled to get upgrades in the next three years. The outlet in Sudbury, Suffolk (“a very picturesque part of East Anglia”, says Dame Sharon) was first to get the treatment with a new layout and technology.
The main Waitrose in Hampstead is next.
“We’ve started to think about how we get the right balance between service and productivity,” says Dame Sharon. “You won’t see Waitrose stores completely stripped of partners and relying on self-checkout.”
It’s somewhat overdue. One wealthy American technology executive who recently moved back to the UK after seven years away was struck by the shabbiness. “What the hell happened to Waitrose?” she asked at an industry dinner.
Meanwhile, Marks & Spencer has been enjoying a resurgence, expanding its grocery business as it chases the crown of grocer to Middle England. Chief executive Stuart Machin recently told The Telegraph he hoped to have overhauled Waitrose’s market share by now.