John Lewis Partnership has restored annual bonuses for its staff for the first time in four years, announcing a 2 per cent payout to its 69,000 partners. The employee-owned retailer, which operates John Lewis department stores and Waitrose supermarkets, made the move as part of efforts to boost morale amid fierce competition in the UK retail market.

Staff had lobbied for the return of the bonus, once considered a key indicator of the company's financial health. In the 1980s, payouts regularly exceeded 15 per cent. The decision comes as the partnership reports progress in its turnaround efforts, with sales rising 5 per cent and profit before tax, bonus, and exceptional items climbing 6 per cent to £134mn in the year to January.

Recent years have seen John Lewis cut other staff benefits, including its final salary pension scheme and discounted rates at company-owned hotels. The bonus restoration follows a 6.9 per cent above-inflation pay rise announced last month for all partners. Chair Jason Tarry, a former Tesco executive, has refocused the company on its core retail businesses after scrapping plans to build rental homes.