John Lewis accused of bullying suppliers into cutting their bills
Retailer tells companies to trim their invoices if they increase sales through its outlets
RETAILER John Lewis has been branded a "bully" and accused of "picking pockets" after it sent a letter to suppliers demanding they trim their invoices by up to 5.25 per cent if their annual sales increase.
The letter, which has been seen by the Daily Telegraph, says John Lewis has created a "platform for growth" by investing heavily in "new stores, refurbishments, and its growing ecommerce operations". Suppliers have benefitted from "increased profit levels" as a result, it says.
To recoup some of its investment, the store is implementing a "growth rebate" scheme that requires suppliers to slash their invoices by up to 5.25 per cent if they enjoy an increase in annual sales through John Lewis outlets.
The scheme, which takes effect from the start of last month, calls on suppliers whose sales grow by between 5 per cent and 9.9 per cent to offer John Lewis a rebate of 0.75 per cent. If sales grow by more than 50 per cent, a 5.25 per cent rebate will apply.
The discovery of the letter comes the week after John Lewis reported a 16 per cent increase in pre-tax profits to £410m and paid a bonus of more than £200m to its employees. The company enjoys a reputation as a model British company.
The letter – which was sent to about 130 suppliers on 22 February - has angered the Forum of Private Business which described the scheme as "outrageous" and accused the department store of being a "bully".
"What a way to treat your suppliers, who are effectively having their pockets picked by John Lewis on the back of strong trading," an FPB spokesman told the Telegraph. "It's a win-win for John Lewis all the way."
John Lewis confirmed last night it had written to a "small number of suppliers" to discuss "bringing their commercial agreements in line with the rest of our supply base". A spokesman for the store said suppliers "retained the right" to discuss the terms of their agreements with John Lewis and "whether it is profitable for them to supply us." ·