John Lewis Partnership’s full-year profits plummeted as its department store was hit by restructuring costs due to redundancies.
JLP’s pre-tax profits were down 77% to £103.9m in the year to January 27, 2018. Before partnership bonus and exceptional items they dropped 21.9% to £289.2m.
The partnership bonus stood at 5% or £74m, down from 6% last year and the lowest since 1954, when it was 4%.
Total sales across the partnership rose 2% to £11.597bn, with Waitrose generating a 1.8% rise to £6.753bn and John Lewis contributing a 2.2% rise to £4.844bn.
Much of the sales growth came from new stores and online.
On a like-for-like basis, Waitrose sales rose 0.9% and John Lewis sales rose 0.4%.
The department store, which has historically led its market, is grappling with the structural challenges and cost pressures afoot in retail.
The rising costs of the National Living Wage, shaky consumer confidence following the Brexit vote, a rise in inflation and a shift away from retail and towards leisure spending have all taken their toll on the industry, with department stores particularly badly affected.
JLP has already reined in expansion plans across both its department store and grocery arms and has upped its focus on productivity in an attempt to lessen the impact of rising wage costs on its traditionally expensive partnership model.
Despite gross sales per average full-time equivalent (FTE) partner increasing 6.5% to £191,300, lower margins led to profit per average FTE partner dropping from £5,800 to £4,800.
Chairman Sir Charlie Mayfield said: “As we anticipated, 2017 was a challenging year. Consumer demand was subdued and we made significant changes to operations across the partnership.
“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.”