John Lewis and Waitrose staff will see bonuses cut to 6% of their annual salary after the firm warned of an “increasingly uncertain market”.
The cut, the fourth in a row, will see the retailer’s staff share a £89.4 million bonus pot, down from £145 million last year.
The figure compares to 10% of salary last year, 11% in 2015, 15% in 2014 and 17% in 2013.
It is thought to be the lowest level since the 1950s.
Chairman Sir Charlie Mayfield said: “In January, we said Partnership Bonus was likely to be significantly lower this year.
“The board has awarded a bonus of 6%, which is equivalent to more than three weeks’ pay.
“Bonus is lower because the board has decided to retain more of our annual profits in order to strengthen our balance sheet.
“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.”
The group warned in January the bonus would be “significantly lower” than last year in the face of a challenging market outlook, partly linked to the collapse in the value of the pound since the Brexit vote.
John Lewis Partnership, which is owned by the employees of the two retail chains, reported pre-tax profits before exceptional items of £370.4 million for the 52 weeks to the end of January 28, a 21.2% increase on last year.
The group said the bonus applied to 86,700 staff.
The company once again flagged that the impact of the collapse in the pound will hurt it in the year ahead, while also pointing to competition in the retail sector.
“In the year ahead, trading pressures will continue as a result of the wider changes taking place in retail.
“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.
“These factors are significant for the outlook where we expect both inflationary cost pressures and competition to intensify in the market as a whole.”
John Lewis said in January it would axe nearly 400 jobs across its restaurants and home fittings service as it grapples with the acute pressures facing the retail sector.
Sir Charlie warned on Thursday the firm is “seeking significant cost reductions”, especially in contract labour and consultancy support.
He also said the partnership began limited trials of “robotic process automation” last year and expects to see these develop into a “significant productivity initiative during 2017”.
Like-for-like sales at John Lewis rose 2.7% over the year, while they dipped 0.2% at Waitrose.