The John Lewis Partnership has restored its bonus and committed to pay the voluntary living wage, alongside a wider pay rise, as it eyes the surge in the cost of living.

The employee-owned company, comprising the eponymous department store chain and Waitrose supermarkets, said its bonus – axed last year for the first time since 1953 as it grappled the COVID-19 crisis – would come in at 3% of salary.

The £46m pot equated to one-and-a-half week’s wages per partner, it said.

The company reported a bottom line loss before tax of £26m – an improvement of £491m on 2020 when it launched a vast plan to save costs, which ultimately included the closure of under-performing stores and almost 4,000 job cuts.

The improved loss, which includes the bonus impact, was on the back of a 38% rise in underlying pre-tax profits to £181m.

The partnership said the performance over the 12 months to 29 January was driven by lower costs and record sales of £4.9bn at the department stores.

They were up 8% on a like-for-like basis while the supermarkets delivered a 1% increase.

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But the group admitted worries ahead, acknowledging that inflation stemming from the COVID recovery and Russia’s invasion of Ukraine would put strain on customer and partner budgets alike.

It announced last month its “Never Knowingly Undersold” promise to customers was to be replaced this summer as part of a new focus on its Anyday value ranges.

John Lewis said that in addition to its voluntary living wage commitment, staff would get a 2% pay rise.

Chair, Dame Sharon White, hailed a “good start” to the group’s five-year overhaul, but said of the outlook: “We see continued uncertainty from global events affecting the economic environment, our customers, partners and society.

“As inflation and energy prices rise, our customers face higher living costs.

“While this creates uncertainties as we look ahead, we remain focused on investing significantly in our Partnership Plan to transform and grow our business.”

It revealed last week that, in line with UK retail rivals, it was to remove from sale all Russian-made products across the group as a response to the country’s invasion of Ukraine.

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