The business of high street shopping is fiercely competitive and fraught with reputational risk. For John Lewis, keeping up with the Joneses ­ in this case, Peter Jones et al ­ is the responsibility of Sharon Flood. She is the person charged with keeping the numerous metaphorical plates of John Lewis all spinning without the whole show coming crashing down. In the land of upside-down Christmas trees, own-label brandware and high-profile shop openings, the retail FD is king.

Sharon Flood has been at the financial helm of John Lewis for two and a half years, so plate spinning is something at which she has become adept. She has two children, is a trustee of a charity, enjoys skiing and windsurfing, ‘anything that gets you out and about’, in addition to discharging her duties at John Lewis.

Tradition is a watchword at the company, but CIMA-qualified Flood, who cut her accountancy teeth at Unilever before moving into finance director roles at BG Electrical and Woolworths, had to pull the finance function into the 21st century soon after stepping through John Lewis’ doors.

Its stock, sales and margins system has been in place for nearly half a century.
‘We faced a big systems’ agenda,’ says Flood. ‘One of our key systems is 40 years old but we’re very far advanced in efforts to replace it. We’re looking to have it in place next year and we’re also looking to implement a new ledger system as well. My time here has involved a huge amount of work in terms of structure and people, but also the systems and processes that underpin it.’

You get the distinct impression on meeting Flood (she answers questions a fraction of a second after they have been asked) that being proactive is an attribute close to her heart. John Lewis is about to enter a third Christmas of outperforming the market, but it has taken major effort to get the finance function up to Flood’s specifications.

Each of the 26 current John Lewis stores has a dedicated finance team at each outlet which is unusual these days, according to Flood. On arrival, she found a small divisional team at the centre of the finance function giving a high level of support to the heads of branches, but very little support to the board making the decisions about the future of business.

‘I looked at the structure and introduced three key analytical teams concentrating on long-term strategy, the buying/marketing side and the store side so that their customers knew who their finance partners were and had somebody to improve the quality of their decision-making and help run their basic processes.’

The CIMA fellow then went about consolidating the processing operations of the divisions into one central hub in Stevenage, which allowed the division to operate under a single agenda ‘rather than having activities here, there and everywhere’.
Strengthening the financial control environment to ensure a more effective balance sheet and cashflow together with tightening up the budgeting, forecasting and reporting all had to be done quickly, Flood recalls.

Focusing on reporting, not being a quoted business means that John Lewis doesn’t have the same obsession with how the numbers look. That’s not to say that the implementation of IFRS has been plain sailing.

Flood concedes that IFRS hurdles caused some ‘restatements around the company’s P&L and our balance sheet’. The standards also built up a lot of property valuation work demands, but Flood says that it does not fundamentally cause John Lewis too much trouble: ‘In terms of its impact on how we make decisions, absolutely not.

‘Does it keep us occupied? Yes, but that’s what we’re paid to do. We deal with lease premiums and amortise them, but we’re not beholden to the City. But it’s part of doing the job. Our decision-making is driven by the right thing to do to be able to give our partners the bonuses that they expect, so we just get on with it.’

Her ‘can-do’ approach is reflected in her views on the age-old issues that plague the accountancy profession. Flood says she has never come across the glass ceiling. On the contrary, she sees being a being a woman as an advantage in terms of coupling good analytical skills with a good people approach. Still, the choices around the work-life balance are pretty key in her book. ‘I want to make sure that I don’t wake up in 20 years’ time with a stellar career but missed seeing my children grow up. That’s a choice that we all have to make whether you’re a man or a woman.’

She also refuses to subscribe to the theory that FDs can make easy scapegoats when things head south.

‘When things are going badly, your FD is your best friend. They are the people who are going to help you work your way through it. As an FD your role is to have solutions to questions like: “What can we do? How can we grow? Where do we need to invest? How do we trim costs but not in a way that’s going to stop the growth of the business?”’

Flood admits there are still limitations to a life shielded from the unforgiving spotlight of the City. Changing the perceptions of finance is tough, especially in a business that’s based around partners and customers, she says.

‘Historically finance has been seen as a something of a gatekeeper; a bit of a negative force. We need to make people realise that we’re a force for good, not necessarily a blocker for what they want to achieve.’

Flood describes herself as ‘time-poor’. As a loyal FD should be, all her gift buying is done through John Lewis Direct, the company’s booming online arm. When working in harmony with Waitrose Ocado and Greenbee, the other parts of the John Lewis Partnership is accounted for, the scale of Flood’s task comes into sharp relief.

After the recent £61.5m Oxford Street store overhaul, Flood is now gearing up for the next stage of John Lewis’ growth. The chain is rolling out a massive expansion programme starting with the opening of a store in Cambridge three times larger than the old one. But the FD is keeping investment levels firmly under wraps.

‘I’m not sure that it is in the public domain, but it’s a very substantial investment.’ To give an impression of the scale of the project, 11 of the John Lewis outlets are worth £100m. ‘We expect a longer payback on our investment than the majority of our competitors. We’re building stores that will be here in a 100 years, not stores that will disappear off the high street after five.

‘It really feels like we’re about to see the results of our investment coming through. The pace is really hotting up.’

Its interims showed that retail sales were up by 6.1% to £1.2bn, and its Oxford St outlet raked in £1m in a single day at the end of September ­ million-pound days usually come nearer to Christmas.

With the ambitious 12-store relocation and opening project stretching until 2013, Flood has also pledged her future to the prospering chain for the long haul: ‘I think it’s our time now at John Lewis. We’re in a great position. I’m helping the business invest a lot of money, so I want to be here for that.’

Avoiding a Christmas turkey

With Christmas on the way, seemingly trivial items such as upside-down Christmas trees (tipped to be the big thing in 2007) hold the key to success in a crucial period on the high street. It's a standard feature of life as a high street retailer that when something undergoes a revamp or an overhaul, the process is lived out very much in the public eye, and the same applies to John Lewis. It still has a reputation to uphold with customers and market watchers despite not having to answer to the City.

'Having really clean stock is so important. Any FD who's been in retail a long time knows the importance of when something hasn't sold you, don't just put it back in the stock room and keeping bringing it back out. We have a big clear-out twice every year and mark down any products that don't work out.'

If anything, John Lewis hasn't been as ambitious as it could have been in backing the products that have ended up flying of the shelves. 'We've been a bit tentative in the past,' says Flood. 'With the Black Christmas tree two years ago we didn't buy enough and then we had to back it with buying more. The customers always surprise us. We get great products and they sometimes want more.

'Since November 2005 we've been outperforming the rest of the market and we'll just keep on doing that. Our role in finance to provide the analytical decisions that help us grow and also to provide the rigour and cost control to make sure that growth floats through to the bottom line. From that, the bottom line flows into our partners' bonuses.'