John Lewis demands service charge cuts from landlords

John Lewis has told the landlords of some of its properties that it will withhold 20% of this quarter’s service charge, the BBC has reported.

The department store business maintained that service charges, covering costs such as security, are too high.

However, the initiative prompted anger among some landlords and could result in legal challenges to recover any money lost.

The demand comes as retailers endure torrid trading conditions and in the wake of the John Lewis Partnership’s first interim loss in its history.

John Lewis told the BBC: “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 to grow footfall to our shops and we hope that our landlords will support us in continuing to do this.”

One landlord said: “This was done without any consultation. Every landlord will be looking at their lease, talking to lawyers who will get revved up to recover this money as a debt.”

John Lewis has around 20 stores in covered shopping centres.

Other retailers, including Next and Primark, have been bringing down property costs when leases have come up for renewal by negotiating better terms. They have pointed to the lower prices being paid by retailers trading alongside them, which have cut property costs through CVAs.