John Lewis Partnership has confirmed employees will receive a bonus of 6% of annual salary, down from 10% last year, as the board has decided to retain more of its annual profits to strengthen its balance sheet.
The bonus of 6% is equivalent to more than 3 weeks’ pay.
“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,” said chairman Sir Charlie Mayfield.
The average pay rates for non-management partners rose 5% during the year.
The partnership, both John Lewis and Waitrose, grew sales by 3.2% to £11.4bn while profit before tax increased 65.4% to £488.2m for the 52 weeks ending 28 January. Net debt was £250.6m, which is an improvement of almost 33% on last year.
John Lewis sales increased 4% to £4.7bn, but operating profit before the partnership bonus fell 7.5% to £231.4m compared with the same period last year.
Fashion sales grew by 3.8% during the year and the chain said its first own-brand luxury label, Modern Rarity, boosted own-brand womenswear sales, which rose by 6.8%.
Mayfield said: “Waitrose and John Lewis have achieved growth in sales and market share, and our profits before exceptionals are up 21.2%. A large part of this profit increase was due to lower pension accounting charges.”
The total accounting pension deficit at 28 January 2017 is expected to be approximately £1bn, which is higher than the £940m deficit at 30 January 2016.
Mayfield cautioned that trading pressures are expected to continue in the year ahead, due to the wider changes taking place in retail. He highlighted the challenges of pricing and the weakness of sterling, and the continued shift from shops to online.