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John Lewis has cut staff bonuses to the lowest level in almost 70 years after seeing a sharp fall in annual profits.
The retailer, which also owns supermarket chain Waitrose, will set bonuses at 2% this year – the lowest since 1953 when it paid no bonus.
Its profits dived by 23% last year to £123m, as it continued to struggle with a consumer spending slowdown.
The chain has launched a review of the business which it warned could take up to five years to show results.
New chair Sharon White – who took over last month – said the changes would in include “right sizing” its shops across both its John Lewis and Waitrose brands and slimming down its head office.
The conclusions of the review are expected to be announced in September.
“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,” Ms White said.
It is the third year in a row that profits have fallen at the department store chain amid a tough retail environment which has seen many of its rivals collapse and close down shops.
Sales were dragged down by a slump in home and electrical appliances, the company said.
The group announced that three Waitrose stores will close later this year at Helensburgh, Four Oaks and Waterlooville as part of the overhaul.
The John Lewis Partnership is owned by its staff, who are known as partners.
‘No retailer is safe’
Julie Palmer, partner at Begbies Traynor, said the chain’s fall from grace had been “spectacular” and warned if Ms White could not turn around the chain “the fallout could be much worse”.
“Once the envy of the retail industry, the company has suffered dismal trading performances over the past few years, demonstrating that the retail race is so fast that even those seemingly on an unstoppable march one year can be vulnerable the next.
“This goes to show that no retailer is safe.”
The John Lewis Partnership is owned by its staff, who are known as partners.
The last time that staff did not receive a bonus was in 1953.
John Lewis has been struggling in a tough retail climate.
The department store has a price comparison promise enshrined in its “never knowingly undersold” slogan, which commits it to matching the prices of High Street competitors, but not those of online-only competitors.