John Lewis has slashed its staff bonus to a 63-year low, despite recording a 21% increase in pre-tax profits.
The bonus, which is the same for employees , will now account for just 6% of salary, the lowest percentage since 1954, when it amounted to 4% of pay. John Lewis, whose operations also include Waitrose supermarkets, said the bonus was the equivalent of three weeks pay.
One of the icons of the British high street, the company said the decision was motivated by the need to strengthen its balance sheet and retain profits.
"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 Sir Charlie Mayfield, chairman of the group.
However, the decision is likely to be met with criticism, given it is the fourth consecutive year the company has opted to cut its staff bonus. Last year, John Lewis slashed the award to 10%, the lowest level in 13 years, which meant an average salary of £1,585 for its 91,500 staff.
Furthermore, the cut comes as the department store posted a 21.7% year-on-year increase in pre-tax profits, before staff bonus and one-off items, to £370.4m.
One-off income items stood at £207.2m, largely offsetting a £42.9m writedown of property and other assets and a £20.7m charge related to redundancy and restructuring costs.
"In the year ahead, trading pressures will continue as a result of the wider changes taking place in retail," Mayfield added.
"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."
Last month, John Lewis unveiled plans to cut approximately 800 jobs across its restaurants and home fittings divisions, in what is the biggest round of redundancies ever in the department's store history.
The high street retailer indicated 773 staff had entered redundancy consultation and been given the opportunity to apply for 386 new roles, although the majority of those affected are expected to leave.
The latest round of cuts are the greatest number of redundancies since 2009, when the company slashed approximately 700 of its in-store call centre positions.