Britain's biggest department store group John Lewis cut its staff bonus for the first time in three years and posted a 3.8 percent fall in year profit, showing even the firm's affluent customer base is not immune to straitened times.
The 148-year-old employee-owned group, whose stakeholder business model has been lauded by politicians including Prime Minister David Cameron, said on Wednesday its 77,217 permanent staff, known as partners, will be paid a bonus of 14 percent of salary, equal to over seven weeks pay, down from 18 percent last year.
John Lewis, which trades from 29 department stores, six John Lewis at home stores, 274 Waitrose supermarkets as well as online businesses, is seen as a UK retail bellwether.
It said it was cautiously optimistic trading conditions may improve later this year, with the Queen's Diamond Jubilee and the London 2012 Olympic and Paralympic Games providing a lift for consumers.
John Lewis said profit before tax and the staff bonus of 165.2 million pounds ($260 million) was 353.8 million pounds in the year to January 28.
That was down from 367.9 million pounds in the previous year, with the shortfall reflecting more discounting in its department stores as a result of its never knowingly undersold policy as well as investment in stores and staff.
The group, the only major British retailer to publish weekly sale figures, said total revenue increased 6.4 percent to 8.73 billion pounds.
Many British retailers are struggling as consumers grapple with inflation, muted wage growth and government austerity measures and worry about job security, a stagnant housing market and the impact of the euro zone debt crisis.
John Lewis has, however, been outperforming the wider market as its more affluent customers have generally coped better than lower income groups in the economic downturn.
After five weeks of its new financial year partnership sales excluding VAT were 7.7 percent higher than last year.
Current trading conditions are still difficult and consumer confidence remains subdued. Despite that we are continuing to grow faster than the market, said Chairman Charlie Mayfield. ($1 = 0.6354 British pounds)
(Reporting by James Davey; editing by Rhys Jones)