Employees at John Lewis (LON: JLH) and Waitrose will have their bonuses cut for the fifth year running as profits continue to fall.
The new bonus will stand at five percent, down from the six percent last year and the lowest level since 1954.
John Lewis Partnership chairman Sir Charlie Mayfield said 2017 had been a “challenging year”. The retail group saw profit plunge by 77 percent to £103.9 million in the year to the end of January.
Waitrose’s profits took a hit as the supermarket is struggling amid fierce competition in the market combined with higher costs and the fall in the value of the pound.
A recent survey from Which? saw Waitrose get knocked off the top spot as the UK’s favourite supermarket, being replaced by discounter Aldi.
After a round of job cuts, the group now employs 3,000 people in the UK and is planning to invest in stores in order to improve customers’ shopping experiences.
“This is no time for a defensive crunch. Our whole game plan is to step up to this challenge and we’ll be stepping up the pace of innovation. It’s the only way to win in this market,” said Mayfield.
The John Lewis Partnership faced high one-off costs in 2017, including £72.8 million on restructuring and redundancy costs.
“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,” added Mayfield.
The company expects a volatile year ahead.
“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.”