Thousands of workers at John Lewis and Waitrose are to see their bonuses cut for the sixth consecutive year after the retail giant revealed a 45.4% fall in annual profits.

The department store will reduce its renowned staff bonus to 3% of annual salary, with 83,000 partners sharing a pot worth £44.7 million, down from £74 million the previous year.

It marks the sixth consecutive year that bonuses have been dropped – down from 5% last year and 17% in 2013..

Sir Charlie Mayfield, partner and chairman of the John Lewis Partnership, said the grocer has suffered a particularly challenging year, particularly in food.

"The Board has awarded a Bonus at 3%," he said.

"This enables us to continue debt reduction, maintain our level of investment and retains solid cash reserves to cope with the continuing uncertainty facing consumers and the economy. We expect 2019 trading conditions to remain challenging but are confident in our strategic direction and customer offer across both brands."

However a statement added that while staff will see their annual rewards slashed, many partners will have benefited from new leadership and apprenticeship schemes in the past year.

"We have also made significant investment in our Partners during the year, particularly in leadership development, apprenticeships and pay, with our average hourly rate for non-management Partners rising to £9.16, 17.0% above the National Living Wage. We expect that average hourly rate of pay to increase by around 4.5% following our April 2019 pay review."

The partnership, which includes upmarket supermarket Waitrose, warned in January that it might have to axe the renowned payout for the first time since 1953 amid challenging trading conditions.

Sales were up 1% across the group at £10.3 billion. After stripping out exceptional items and the bonus payout, pre-tax profit was up 9.2% at £117.4 million.

Operating profit at Waitrose was up 18% to £203.2 million.

However, it was down sharply at John Lewis, falling 56% to £114.7 million because of weaker home sales, margin pressure, higher IT costs, the property impact of new shops and lower profits on asset disposals.

"Operating profit recovered strongly in Waitrose & Partners, up 18% (to £203.2m), mainly due to improved gross margins. However, it was down sharply, by 56% (to £114.7m), in John Lewis & Partners because of weaker home sales, gross margin pressure, higher IT costs, the property impact of new shops and lower profit on asset sales. Despite this, we managed cash tightly and reduced total net debts by £401.3m," Mayfield said.

"While Partnership profits were down, there were several areas where we have seen performance move forward, particularly in areas where we have invested. In John Lewis & Partners the launch of our own-brand Womenswear and expansion of personal styling offer has driven strong sales growth in Fashion, growing market share significantly.

"In addition, the investment in front line service delivered best ever customer experience ratings in John Lewis & Partners. In Waitrose & Partners, significant investment in Waitrose.com, new customer smartphone apps and customer delivery services has led to a strong increase in online grocery sales of 14%, well ahead of the market, and increased online customer satisfaction," he added.

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