Charlie Mayfield, chairman of John Lewis, said he had little hope of a pick-up in business at John Lewis stores and Waitrose supermarkets in the coming months as the retailer prepared to trim up to 540 jobs across its department store division.
Mayfield said he was preparing for 'difficult trading' in the coming 12 months after a 'roller-coaster' 2008, in which annual profits fell by a quarter.
Cutting the staff bonus pool by nearly a third to £126m, Mayfield said: 'There is uncertainty again from consumers, not a lot of liquidity from the banking sector and all this is conspiring to depress trade.
'The second half should be more stable as we start to annualise on some of the effects of the downturn.'
Department store chain John Lewis, which saw operating profits fall 27% to £146m, said it would be making job cuts as it strove to avoid the worst of the recession.