However, a VAT refund means that the partnership's 39,000 staff will receive a profit share bonus equivalent to 19 per cent salary, although this is down from last year's 22 per cent payment.
This will give the entry level pounds 8,000-a-year shopfloor worker a pounds 1,400 pay-out while a pounds 24,000-a -year manager will get pounds 3,800.
Commenting on the outlook, Stuart Hampson, the John Lewis chairman, said: "I foresee a sticky few months ahead. The second half might be a little easier as we run towards the millennium, but this is a year for taking every week as it comes."
He added that he had seen nothing in Tuesday's Budget to lead to a "feel good factor". But he added: "All we need is for a little more confidence among consumers to blow non-food retailing out of the doldrums."
Furnishings and fabrics did well but the audio-television ranges were hit by "customer hesitation" as digital products are introduced.
Stripping out a pounds 33.5m VAT refund, profits fell 17 per cent to pounds 225m on sales up 2 per cent to pounds 3.5bn. Mr Hampson was downbeat on prospects for the group's 23 department stores, which saw flat sales last year. He pointed to "stagnant sales" at the turn of the year as an indicator of the immediate trading pattern.
The flat figures included the Cribbs Causeway store which opened near Bristol last year. Two other large stores are due to open at the Bluewater Park shopping centre, which opens in Kent on Tuesday, and at Glasgow's Buchanan Gallery at the end of the month.
Sales in the Waitrose supermarkets rose 3 per cent and a store expansion programme is under way at the chain.