Sheffield Council is paying John Lewis millions under a new deal – here is what an investigation has found

Sheffield Council is paying John Lewis millions of pounds to buy out the retailer’s lease on its department store in the city centre as part of a new deal, an investigation by The Star has found.

Thursday, 17th September 2020, 11:57 am

Last month the John Lewis Partnership announced that it had agreed a 20-year lease, to run until 2040, with the council on its Sheffield branch.

This incorporates plans for a refurbishment of the building, which dates back to the 1960s – details of the revamp are ‘under review’, the partnership said, but work is likely to start in mid-2021 and the store will remain open throughout.

The agreement came shortly after members of the council’s cabinet committee approved proposals to keep John Lewis in Sheffield as part of the £480 million Heart of the City II scheme – allowing the authority to buy out John Lewis’ long-term ‘nominal’ lease on its premises in Barker’s Pool, enter into a new contract with a rent based on turnover, and give the retailer money towards the cost of improvements.

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John Lewis in Barker's Pool, Sheffield.

Details obtained from the council via a Freedom of Information request submitted by The Star show that the payment for buying John Lewis’ existing leasehold interest came to £3 million.

The council said this transaction will be recorded with the Land Registry and that the partnership, which is closing shops elsewhere in the country, has ‘committed to reinvest back the £3 million into the store so the benefit is being retained in Sheffield’.

A John Lewis spokeswoman confirmed the company was being paid £3 million, and that the money would be spent on the Sheffield branch.

“We are in the process of finalising the details,” she said.

Councillor Mazher Iqbal, Sheffield Council's cabinet member for business and investment, John Lewis Sheffield's head of branch Patrick Duffy, and Mike Norris from the council's strategic development partner Queensberry. Picture: Chris Etchells.

However, the council refused to disclose the minimum, and maximum, amount of rent John Lewis would pay per annum under the terms of the new lease agreement.

“The rental payments are linked to John Lewis & Partners’ turnover,” the council said. “The turnover information belongs to John Lewis & Partners and disclosure of this information would be likely to prejudice their commercial interests, as it would reveal valuable information about the company which could be used by competitors to gain an advantage.”

The council also would not state the amount of money it proposes to contribute towards the phased refurbishment of the department store building – it said the figures related to ‘commercial interests and commercial procurement arrangements’.

A request to see the annual sum the council has collected from John Lewis in business rates in recent years was also refused.

The Barker's Pool store - then Cole Brothers - in the 1960s. Image: Picture Sheffield.

“Information provided to a local authority for the purposes of calculating rates or reliefs is information that a reasonable person would regard as confidential,” said the council, which cited a legal ruling from 2019.

“Disclosure of the information would lead to an actionable breach of confidence as, if the council were to disclose the information, it would breach the general common law principle of taxpayer confidentiality.”

The 20-year lease is the latest development in a saga that stretches back decades, encompassing the takeover and eventual rebranding of Sheffield’s Cole Brothers shop, and failed plans for an enormous brand new store that never came to fruition.

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The employee-owned John Lewis Partnership arrived in Sheffield in 1940, when it acquired Cole Brothers – then based on Fargate, where the family firm was established in 1847 – along with the rest of the Selfridge Provincial Stores group.

In 1960, The Gazette – John Lewis' in-house publication – announced the intention to expand Cole Brothers by moving the shop to a new building.

The old site on Fargate, which had become known locally as ‘Coles Corner’, was sold for £1 million – £21.5 million today – and the relocation to Barker’s Pool happened in 1963. The new store was built on derelict land where Sheffield’s Albert Hall, gutted by a fire in 1937 and then demolished, once stood. Adverts trumpeted the new building as ‘one of the newest department stores in Europe’ and ‘a shopper’s delight’.

Just over 30 years later, in 1994, a report by Hillier Parker and the Oxford Institute of Retail Management highlighted Sheffield city centre’s decline and recommended the creation of a major retail scheme.

The developer Hammerson was hired by urban regeneration company Sheffield One and the city council to deliver a ‘new retail quarter’ in 2001, and in 2002 the location for a bigger John Lewis store – the cornerstone of the new quarter, which later gained the marketing name Sevenstone – was confirmed as the site of the Wellington Street fire station between Carver Street and Rockingham Street. Cole Brothers was rebranded as a branch of John Lewis the same year.

In 2007, architects O'Donnell + Tuomey were hired to design Sheffield’s new 260,000 sq ft John Lewis department store, with construction scheduled to begin in 2008. But progress on Sevenstone stalled because of the recession and in 2012 John Lewis said it was no longer seeking to move from its existing building. The retailer spent £1.3 million on a refurbishment at Barker’s Pool in 2014, including a new-look beauty hall.

By this point Hammerson had departed, and the masterplan for Heart of the City II, led by the council and its strategic development partner Queensberry, was revealed in 2018.

Earlier this year John Lewis was forced to close all of its sites because of the coronavirus lockdown. A period of uncertainty followed as the partnership reopened its branches in phases, while stating that it was unlikely all stores would return as the business had entered the pandemic with ‘weakening profits’ dented by changing consumer habits. The closure of several shops, including a large outlet in Birmingham, was later confirmed, but Sheffield’s store was spared.

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