Retail giant John Lewis Partnership has cut its staff bonus to 2% of annual salary - the lowest payout since 1953 - as it reported a 23% plunge in full-year profits to £123 million.
It also announced it was closing three Waitrose stores this year - at Helensburgh, Four Oaks and Waterlooville.
"These decisions are never taken lightly and every Partner who wishes to stay in the Partnership will be actively supported to do so," the partnership said in a statement.
The chain said its weaker performance was driven by "significant operating profit decline in John Lewis" that was only partly offset by profit growth in Waitrose and lower costs.
In a letter to staff, chairman Sharon White wrote: "This is a weaker performance than we had hoped for, driven by significantly reduced profitability in John Lewis.
"Despite a solid performance in Waitrose, it is our third year of declining profit across the Partnership as a whole.
"This year we saw a one-off reduction in the value of our John Lewis shops of £123million, principally as a result of shops playing less of a role in driving online purchases."
The chain said it was hopeful it would turn the performance around.
White said John Lewis Group planned to invest "significantly" in Waitrose.com, and will be recruiting 2,400 new staff and building a new fulfilment centre in Enfield to get more products online after its deal with Ocado ends.
There were also plans to slim down head office functions and promote closer working between workers at Waitrose and John Lewis.
"We are confident that our new products and services and focus on outstanding customer service will reinforce the strength of our brands," John Lewis said in a statement.
"We are planning for the market to remain volatile, but expect continued cash generation, allowing us to further strengthen our balance sheet and maintain our level of investment."
