Major British department store group John Lewis has informed shopping centre landlords that it will withhold 20% of this quarter’s service charge seeking to cut costs, Reuters reports.
British retaiers are facing increasing pressures, from the shift to online shopping, subdued consumer spending and ongoing Brexit uncertainty.
John Lewis is part of the employee-owned John Lewis Partnership, which said on Tuesday it was seeking to save £100m through a significant management restructure.
Service charges are the fees retailers pay on top of rent for services such as heating, cleaning, maintenance and security. John Lewis said these charges had risen regularly and landlords had not cooperated in trying to reduce costs.
There are 50 John Lewis department stores in the UK in total. Describing the decision to withhold 20% of the service charge at around 20 shopping centres, a spokeswoman for the chain stated:
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. 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.
Asked if the move could leave John Lewis open to legal action from landlords, the spokeswoman said: “We are looking to work with our suppliers, so those conversations have started.”
Intu Properties (INTUP) and Hammerson (HMSO) and are among the firm’s biggest landlords.
Last month, John Lewis reported a £61.8m loss for the six months to July 27th. Its sales are down 2.1% over the 35 weeks to Sept. 28th.