John Lewis Partnership is to axe its famous staff bonus for the first time in more than 60 years after slumping to a loss in its opening half of 2020.
Dame Sharon White, boss of the employee-owned retailer, warned it was on course to make “a small loss or a small profit for the year” after coronavirus ravaged sales at its department store chain.
"I would expect it to be a couple of years without a bonus," she added.
It is the first time since 1953 that John Lewis has not paid out a proportion of profits to staff.
The mutual slumped to a £635m pre-tax loss after it had to write down the value of its stores by £470m. Online sales now account for almost two thirds of its sales.
It said that before the pandemic, online revenues accounted for abound 40pc of sales, but this had now increased to 60pc.
Revenue and net debt were flat at £5.5bn and £2.3bn respectively. It lost £200m in sales after 50 John Lewis branches were forced to shut in March.
Finance chief Patrick Lewis said he was "very pleased" with the performance of the business.
Dame Sharon emphasised that the mutual was not a conventional business and "we are here to make sufficient profit, not maximum profit".
Eight John Lewis will close permanently, including travel hub stores at Heathrow and London St Pancras, putting 1,300 jobs at risk.
The top brass declined to rule out further job cuts at its head office after it previously said it wanted to cut costs by £100m.
Dame Sharon, who formally joined in March and is attempting to revive the company's fortunes, insisted both John Lewis and sister business Waitrose had enough cash in the bank to pay the bills.
The partnership said it had access to £2.1bn compared to £1.5bn at the start of the crisis, mainly because it borrowed more money. Because it is owned by employees, the business cannot raise cash from outside investors.
John Lewis said it would start paying a bonus again once profits hit £150m and its debt falls.
“I know this will come as a blow to Partners who have worked so hard this year,” Dame Sharon said.
Both businesses are banking on Christmas to improve its profits like most retailers. The loss-making department store chain has been leaning on profitable Waitrose to survive.
The chairman said she would give more details about her strategy in October after the company admitted she was considering some radical measures such as turning the excess space in shops into housing.
Yesterday it emerged John Lewis could rent out half of its Oxford Street flagship store as office space to build up funds as it focuses on online.