Bonuses for 84,000 staff at John Lewis and Waitrose have been cut for the fifth year in a row. Employees will get a 5% bonus, down from 6% last year and the lowest since the 4% paid out in 1954.
Annual group profit, before the partnership bonus, tax and exceptional items, fell 21.9% to £289.2m.
John Lewis Partnership chairman Sir Charlie Mayfield said 2017 had been a “challenging year”, as expected, with “subdued” consumer demand.
He said weakness in sterling had led to higher costs, putting pressure on the business’s profit margin.
The partnership said it had been hit by exceptional costs of £111.3m, including £72.8m on restructuring and redundancy costs, principally in relation to brand, distribution and retail operations.
“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,” Sir Charlie said.
He said the firm remained committed to increasing pay rates for non-management staff, and that the average hourly rate of pay for a non-management workers was £8.91.
‘Volatile’ year ahead
Like-for-like sales – which strip out the impact of store openings – at the John Lewis department stores were up 0.4%. At Waitrose, sales returned to growth, with like-for-like sales rising 0.9%.
Gross sales for the full-year period were up 2% at £11.6bn.
“We expect trading to be volatile in 2018-19, with continuing economic uncertainty and no let up in competitive intensity. We therefore anticipate further pressure on profits,” the company said.
Redundancy payments cost it £72.8m in 2017. The partnership said 1,440 members of staff had left the business through redundancy in the past year.