Britain's John Lewis Partnership said it expected 2019 to remain challenging after it reported a 45% drop in full-year profit, dragged down by the 'near constant discounting' of its department store rivals.
The employee-owned business, which runs the country's premier department store chain and the up-market Waitrose supermarket, warned on profit last June after being forced to match the aggressive tactics of its rivals as they fought for survival.
Profit Before Tax Falls
It said on Thursday that profit before tax and one off items fell to £160 million ($212 million) in the year to 26 January 2018, down from £292.8 million made in 2017-18.
As a result it will pay its workers, which it calls partners, a bonus of 3% of salary. It paid 5% last year - the lowest since 1954.
"In line with expectations set out in June, our Partnership profits before exceptionals have finished substantially lower in what has been a challenging year, particularly in non-food," Charlie Mayfield, chairman said in a statement.
Britain's department store sector has been under intense pressure from weak demand and rising costs for several years.
BHS went bust in 2016, House of Fraser was bought out of administration last year by Mike Ashley's Sports Direct and Debenhams has issued a raft of profit warnings and is closing stores.
Last June the John Lewis Partnership refined its strategy, saying it would invest up to £500 million a year, aiming to differentiate its businesses through innovation and services.
For 2019 the group said it was well prepared for Britain's departure from the European Union, having come up with a plan that covers currency moves, tariffs, customs changes and implications for labour.
It is concerned that a disorderly departure would hit consumer confidence.
It said it had also built up a strong liquidity position of nearly £1.5 billion so it can continue to invest in the business and mitigate any risks.
"Given the current level of uncertainty, we expect 2019 trading conditions to remain challenging," it said.