John Lewis staff will be getting lower bonuses this year, after the department store unveiled a fall in profits.
Chairman Charlie Mayfield said the results were "better than expected", partly as the retail stalwart enjoyed a buoyant Christmas following a disappointing first half.
The overall performance resulted in the group paying its 81,000 staff a lower bonus of 14 per cent, equal to more than seven weeks' pay, from a pot of £165.2m.
As for the UK economy in general, Mr Mayfield said: "The trajectory has changed. My own view is that in the second half we will move out of being in decline to small growth."
His views will offer some hope to the troubled retail sector, which has been battling a consumer downturn for around four years and most recently suffered a 0.3 per cent fall in underlying sales in February, according to the British Retail Consortium.
John Lewis Partnerships' pre-tax profits, before bonuses, fell by 3.8 per cent to £353.8m over the year to 28 January, partly reflecting a significant hit from the department store's Never Knowingly Undersold price-match policy, as it was forced to match fierce discounting by its rivals.