Staff at the John Lewis Partnership will see their bonuses cut for the fifth year in a row after the retail giant revealed a slump in profits and warned earnings will remain under pressure in 2018.
The group said it will reduce the renowned bonus to 5 per cent of annual salary, with 85,500 partners sharing out a pot worth £74 million, down from £89.4 million the previous year.
It has cut the bonus for five years running now, down from 6 per cent last year and as much as 17 per cent in 2013.
It comes as the partnership - which owns the eponymous department store and upmarket supermarket Waitrose - posted a 77 per cent plunge in bottom line pre-tax annual profits to £103.9 million after one-off charges.
Underlying pre-tax profits were 21.9 per cent down at £289.2 million for the year to January 27.
Sir Charlie Mayfield, chairman of the John Lewis Partnership, said it had been a “challenging year”.
He also cautioned that the group expects “further pressure on profits” over the year ahead amid volatile trading.
Sir Charlie added: “We said in January 2017 that we were preparing for tougher trading conditions, with weakness in sterling feeding through into cost prices.
“This was why we chose to reduce the proportion of profits paid as partnership bonus last year so as to absorb these impacts while continuing to invest in the future and in strengthening our balance sheet.”
John Lewis Partnership, which is owned by the employees of the two retail chains, had already warned in January that annual profits would be hit amid attempts to remain competitive despite facing cost pressures from the weak pound.
It added that the new financial year had got off to a disappointing start for its John Lewis chain, with like-for-like sales for the first five weeks down 3.4% after disruption from last week’s heavy snow.
Waitrose has seen like-for-like sales rise 2.4% since the year-end.
“We expect trading to be volatile in 2018/19, with continuing economic uncertainty and no let-up in competitive intensity,” Sir Charlie said.
He admitted that changes made across the group had affected “many” of its employees, with 1,400 redundancies in the past year.
Redundancy and restructuring costs were part of the £111.3 million hit that contributed to the hefty fall in bottom-line profits.
Annual results showed that gross sales across the partnership rose 2% to £11.6 billion.
John Lewis saw like-for-like sales edged 0.4 per cent higher, while operating profits lifted 4.5% to £254.2 million, but Waitrose saw profits collapse.
The supermarket posted a 32.1 per cent decline in operating profit to £172 million.
Waitrose said the profit fall was down to a decision “not to pass on all cost price inflation” to customers and investments in “customer experience”.
Like-for-like sales at Waitrose grew by a paltry 0.9% as the sector continued to reel from soaring Brexit-fuelled inflation and fierce competition.
The grocery chain responded by lowering the prices of hundreds of products, helping comparable sales growth pick up to 1.1% in the final six months, although this hurt profits.