Bonus down to 6% for John Lewis and Waitrose staff in lowest rate since 1950s
John Lewis and Waitrose staff will see bonuses cut to 6% of their annual salary after the companies warned of an "increasingly uncertain market" this year.
The cut, the fourth in a row, will see 86,700 staff across the John Lewis Partnership share a £89.4 million bonus pot, down from £145 million last year.
The figure compares to 10% of salary last year, 11% in 2015, 15% in 2014 and 17% in 2013.
It is thought to be the lowest level since the 1950s and is equivalent to around three weeks' pay.
Chairman Sir Charlie Mayfield said: "Bonus is lower because the board has decided to retain more of our annual profits in order to strengthen our balance sheet.
"This allows us to maintain our level of investment in the face of what we expect to be an increasingly uncertain market this year, while absorbing the costs associated with adapting the partnership for the future."
The group warned in January the bonus would be "significantly lower" than last year in the face of a challenging market outlook, partly linked to the collapse in the value of the pound since the Brexit vote.
The company once again flagged that the weak pound will hurt it in the year ahead, while also pointing to competition in the retail sector.
"The two major influences are pricing, where the rate of change in selling prices is likely to be significantly slower than the rate of change in input costs as a result of weakness in the sterling exchange rate, and the continued shift from shops to online.
"These factors are significant for the outlook where we expect both inflationary cost pressures and competition to intensify in the market as a whole."
John Lewis Partnership, which is owned by the employees of the two retail chains, reported pre-tax profits before exceptional items of £370.4 million for the 52 weeks to the end of January 28, a 21.2% increase on last year.
Like-for-like sales at John Lewis rose 2.7% over the year, while they dipped 0.2% at Waitrose.
Gross sales across the group rose 3.2% to £11.4 billion.
Operating profit before the bonus and exceptional items rose 9% to £253.5 million at Waitrose, and fell 2.8% to £243.2 million at John Lewis.
The department store chain said in January it would axe nearly 400 jobs across its restaurants and home fittings service as it grapples with acute pressures facing the retail sector.
Sir Charlie warned on Thursday the firm is "seeking significant cost reductions", especially in contract labour and consultancy support.
He added that the partnership began limited trials of "robotic process automation" last year and expects to see these develop into a "significant productivity initiative during 2017".
He said: "Probably we'll see a continual gradual decline (of jobs) but it's not going to be much faster than that, and we do absolutely expect to see that the jobs that remain will be better paid and that is our focus."
The company added the average hourly rate of pay for its non-management staff will rise beyond the current £8.67 following an April pay review.