Profits before bonus and tax at John Lewis Partnership - which includes Waitrose - fell 62.7% for the year to 27 January, following restructuring and redundancy costs.
Restructuring and redundancy costs at the business totalled £72.8m for the year. In February 2017 John Lewis revealed that it had placed 773 members of staff in consultation as part of a restructure that would then see it create 386 new jobs for those impacted, resulting in a total reduction of 387 jobs.
Gross sales at the partnership were up 2% for the year to 27 January 2018.
Profit before partnership bonus, tax and exceptional items at the wider group was down 21.9% to £289.2m, largely due to lower gross margins in Waitrose driven by the weaker exchange rate and its commitment to competitive pricing.
However, John Lewis led the way posting an increase in both sales and profits for its full financial year.
Gross sales at John Lewis were up 2.2% to £4.8bn for the year, while operating profit before exceptional items was up 4.5% to £254.2m. Like-for-like sales edged up by 0.4%.
Fashion sales at the retailer were up 3.2%, boosted by a “particularly strong” performance across womenswear, which was up 5%. Own brand womenswear was up 15% on 2017.
Customer numbers at John Lewis increased by 2.5% to 12.6 million.
The retailer said it will launch a number of “test and learn” innovations during the year to help staff further improve customer service, and it will conclude its programme of moving online content to a single platform.
The partnership bonus this year was 5% of staff salary, totalling £74m.
Sir Charlie Mayfield, chairman of John Lewis Partnership, said: “As we anticipated, 2017 was a challenging year. Consumer demand was subdued and we made significant changes to operations across the Partnership which affected many partners.
“We said in January 2017 that we were preparing for tougher trading conditions with weakness in Sterling feeding through into cost prices, putting pressure on margin, and much higher exceptional costs as a result of an acceleration of planned changes. 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. We did both and I am pleased to say that despite lower profits, strong cash flow has enabled us to reduce our total net debts.
“Partnership bonus has been awarded at 5%. We also remain committed to increasing pay rates for non-management partners, and in October we increased pay outside the annual pay review cycle for 17,000 partners. As at January 2018, the average hourly rate of pay for a non-management partner was £8.91.”