John Lewis has cut its staff bonus to the lowest level in 66 years, as it said underlying profits had slumped.
The company said 83,900 workers, known as partners because they jointly own the business, would receive a bonus worth 3% of annual pay. All partners, from leading executives to Saturday shelf-stackers, receive the same percentage bonus.
Last year the bonus was 5% of annual pay after profits plunged.
This year’s bonus cut came as underlying profits fell 45.4% to £160m in the year to the end of January.
The bonus was first paid in 1920.
Sir Charlie Mayfield, chairman of the group, which owns a chain of department stores and Waitrose supermarkets, said: “The market context continues to be challenging. That’s evident in our results, especially in John Lewis & Partners, where we saw near-constant discounting across many categories from October onwards in response to the combination of subdued demand, excess retail space and some other retailers’ distress.”
Mayfield said cutting the bonus enabled the company to continue debt reduction, maintain investment and retain solid cash reserves to cope with the continuing uncertainty facing consumers and the economy. “We expect 2019 trading conditions to remain challenging but are confident in our strategic direction and customer offer across both brands,” he said.
At Waitrose, operating profits rose 18% to £203.2m as profit margins improved. However, profits slid by 56% to £114.7m at the John Lewis department stores because of weaker home furnishings sales, higher IT costs, new store openings and lower profit on asset sales.