John Lewis Partnership, the parent of John Lewis & Partners and Waitrose & Partners, has announced its third consecutive slide in full-year profits, with a pre-tax drop of 23% for the year ended 25 January.
New chairman Dame Sharon White, who joined in January from Ofcom, said it had been a "weaker performance" than the company had hoped for, driven by "significantly" reduced profitability in John Lewis.
Gross sales across the group edged up 1.5% to £11.5bn, but pre-tax profits before exceptional items tumbled 23% to £123m.
"Despite a solid performance in Waitrose, it is our third year of declining profit across the partnership as a whole," White said.
As a result of the weaker-than-expected performance, the retailer announced that it will pay out just a 2% bonus to staff – the lowest amount in 67 years.
White said the bonus was "prudent and affordable, and it recognises the contribution made by partners working in the business today without creating risk for our future sustainability".
In particular, she highlighted its home, electricals and online offerings as areas where the retailer would focus on driving improvements.
The closure of three underperforming Waitrose stores in Helensburgh, Four Oaks and Waterlooville was also announced.
"We need to reverse our profit decline and return to growth so that we can invest more in our customers and in our partners. This will require a transformation in how we operate as a partnership and could take three to five years to show results," White said.
The business is conducting a restructure and strategic review, which includes looking at ways to slim down its head office function by bringing John Lewis and Waitrose teams together.
There have been significant changes made to the marketing team at John Lewis in recent months. In October, it was announced that Craig Inglis – the marketer who introduced the brand’s famous epic Christmas ads – was leaving the retailer.
His departure followed that of John Lewis managing director Paula Nickolds, who had been expected to take up the position of executive director of brand.