John Lewis Partnership has decided not to pay staff an annual bonus despite profits rising threefold on the back of investment in the business.

Profit before tax and exceptional items tripled from £42m to £126m as the number of shoppers over the year rose by 2%.

The company said that it wants to ensure sustainability over the long term and has decided to hike staff salaries.

“We’ve consistently said that at this point in our transformation, this is best served by investing in our retail businesses and in Partners’ base pay,” it said in a statement.

“So after careful consideration, we do not believe it would be right to award a Partnership Bonus this year. We are increasing overall pay by £114m in 2025, building on the £116m increase in 2024.

The company invested a third more than in the prior year and intends to step up its transformation plan in the year ahead.

Profit before tax grew from £56m to £97m, up 73% on a 3% year-on-year rise in sales from £12.4bn to £12.8bn. There was 4.1% year-on-year sales growth in John Lewis stores over the eight weeks Christmas trading period.

The operating profit margin improved to 2%, up 0.9 percentage points.

From 1 April, staff working outside of London at John Lewis and Waitrose will see the minimum rate increase from £11.55 to £12.40 an hour. For staff inside the M25, it will rise from £12.89 to £13.85.

Rates of pay for employers with enhanced skills and who take on specialist roles in shops will increase to £13.39 per hour, rising to £14.96 inside the M25.

In addition, staff who have made an ‘exceptional’ contribution to the business will receive extra pay on top of the standard increase. As a result, a customer-facing partner could see their pay rise by up to 9.4%.

Chairman Jason Tarry said: “These are solid results, which show that our customers are responding well to our investments in quality products, value and service. We have made good progress with much more still to do.

“Looking forward, I see significant opportunity for growth from both our Waitrose and John Lewis brands. Our focus will be on enhancing what makes these brands truly special for our customers.

“This will involve considerable catch-up investment in our stores and supply chain, underpinned by a strong focus on the core elements of great retail, delivered by our brilliant Partners

“Our distinct Partnership model stands out as a key competitive differentiator, enabling us to adopt a long-term perspective. I am confident with the transformation momentum in the Partnership, we remain well placed to drive further growth in the year ahead and over the longer term – creating a Partnership that our customers and Partners are truly proud of.”

Outgoing chief executive Nish Kankiwala said there had been continued momentum through the year and especially over Christmas.

“Tripling our profit is a significant testament to the progress of our transformation – focused on delighting customers while continuing to deliver efficiency improvements, thereby laying the foundations for long-term sustainable growth.

“Both brands are showing good momentum. Our strategic investments in product innovation, quality, service and value have yielded significant improvements in customer satisfaction, attracting more customers to shop with us.

“As I step down after two years as CEO, which has been an incredible privilege, I want to express my gratitude to our Partners who have shown amazing commitment to our refreshed plan. I am confident in the Partnership’s continued success given the momentum we have built and the opportunities that lie ahead.”

Sales at John Lewis stores were in line with last year, at £4.8bn and ahead of the market with momentum building across the year. Adjusted operating profit was £45m.

The company said: “This year has been pivotal for our business in what remains a challenging environment for the sector. We have taken steps to invest in the performance of John Lewis. Our focus has been on providing even better value through the return of the Never Knowingly Undersold promise, improved customer service and better product ranges.

“The strategy has shown early success, with the business experiencing contrasting halves within the year. The first half saw a 3% decrease in sales and a £24m drop in adjusted operating profit due to investments in growth. Marked improvement in the second half led to a 3% increase in sales and £8m growth in adjusted operating profit, creating momentum for the future.”

Waitrose sales grew 4.4% to £8bn and volumes were up 2.6% as Waitrose continued its positive momentum. Investment in Waitrose’s quality food proposition and lower prices – together with further improvements in technology and availability – helped drive this growth.

Adjusted operating profit was £227m, up £122m as sales growth combined with productivity improvements delivered profit momentum. Operating margin doubled year-on-year to 3.0%.