The John Lewis partnership has reduced its annual staff bonus to 10% this year following an 11% offering in 2015.
The bonus, which will be shared amongst 91,500 John Lewis and Waitrose partners, is worth around 5 weeks' pay and is the third consecutive fall since the 2013 17% payout. It follows a year of challenging trading conditions in which profits were hurt by intense rivalry from the grocers and significant pension charges.
John Lewis will likely take action to reduce costs this year, with a reported plan to close staff canteens and introduce longer shifts for hundreds of delivery drivers.
Underlying pretax profit for 2015 fell 10.9% to £305.5m .
“The Partnership has delivered a healthy trading performance and increased market shares in challenging conditions," said Chairman Sir Charlie Mayfield. "Although Profit before tax and exceptionals was down by 10.9% on last year, that was entirely due to higher pension charges arising from volatility in the market-driven assumptions, and lower property profits. Excluding these, our profits were around 7% up on last year which, together with a strengthening balance sheet, represents good progress over the year."
He added that there was a "subdued demand in non-food" and that partners performed well on "quality, value and product innovation" while "controlling costs tightly and increasing margin."
As a result, Waitrose gained market share and grew profits. The upmarket grocer's game-changing initiative myWaitrose now has 6m members.
In John Lewis, sales growth and market share gains were made across the Fashion, Home and Electricals and Home Technology categories. Online sales growth was especially strong at 17% although sales in shops were down 1%.