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% of annual salary, with 85,500 partners sharing out a pot worth £74 million, down from £89.4m the previous year.
It has cut the bonus for five years running now, down from 6% last year and as much as 17% in 2013.
It comes as the partnership - which owns the eponymous department store and upmarket supermarket Waitrose - posted a 77% plunge in bottom line pre-tax annual profits to £103.9m after one-off charges.
Underlying pre-tax profits were 21.9% down at £289.2m 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.”
The news from John Lewis resulting in the decision to cut staff bonuses comes as retailers across the board struggle with volatile trading conditions and consumer confidence.
The group is far from alone in reporting that it has struggled to balance cost pressures from the weak pound with remaining competitive, and has added to warnings that it sees little let-up ahead.
Last week the collapse into administration of two major UK chains - electronics company Maplin and Toys R Us - on the same day laid bare the high street’s struggle to adapt to falling consumer spending and rising inflation.
This week New Look added to the high street’s dismal start to 2018 with its announcement that it was looking to close nearly 10% of its 593-strong UK store estate.
Deloitte partner Daniel Butters, who is handling the New Look company voluntary arrangement, said the retail trading environment in the UK remained “extremely challenging, driven by weaker consumer confidence, the implications of Brexit and competition from online channels”.