The John Lewis Partnership has slashed its staff bonus in the face of an "uncertain market" in the year ahead.
The bonus, one of the key perks for John Lewis employees (also known as partners), was cut to six per cent of salary, totalling £89.4m. Last year, the employees were given a 10 per cent bonus.
In a statement as part of the business' full-year results, Partnership chairman Sir Charlie Mayfield said: "[The] bonus is lower because the Board has decided to retain more of our annual profits in order to strengthen our balance sheet.
Read more: John Lewis to cut almost 400 jobs
"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."
When accounting for exceptional items, operating profit at both Waitrose and John Lewis was down by 11.3 per cent and 7.5 per cent respectively.
However, the department store said it had been investing in pay, and that the average pay rates for non-management staff had risen by five per cent as compared to the year before.
The national living wage has become a significant cost for John Lewis and other retailers. Although retailers like John Lewis are not minimum-wage employers in general, they must maintain pay differentials for staff who are not in minimum-wage roles.
Today the business said pay rises for staff cost it an extra £36m last year. On average, John Lewis staff now earn £8.67 per hour. Yesterday, chancellor Philip Hammond said the national living wage will rise to £7.50 per hour - and John Lewis is set to increase its pay for workers around the same time.