JOHN Lewis has revealed it slumped to a £99 million half-year loss as it said it opted to “forgo” profit to help staff, customers and suppliers through the cost of living crisis.

The employee-owned retail giant announced a £500 one-off payment to full-time workers, with a pro-rata amount for those working part-time.

It also said it is increasing by four per cent the entry level pay for employees - known as “partners” within the group - which will cost it £10 million over the second half as part of a £45m support package.

However, the measures, as well as efforts to rein in prices for customers despite “unprecedented” hikes in its own costs, are taking their toll on the firm’s bottom line.

The John Lewis Partnership, which has stores including John Lewis and Waitrose in Edinburgh and Glasgow, widened pre-tax losses for the six months to July 30 compare with losses of £29m a year earlier.

The group signalled a “highly uncertain” end to the year, including the peak Christmas season.

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It also warned employees that it will need a “substantial strengthening” of its performance over the second half to put it on track to pay out an annual staff bonus.

Dame Sharon White, chairman of the John Lewis Partnership, said the move to ramp up financial support for employees is “the right thing to do”.

She said: “We have made a conscious choice to forgo some of our profit to provide more support to partners and more support to some of our suppliers and customers as well.”

The Herald: John Lewis sales were £2.1bn, up 3% like-for-like on last year. Picture: PAJohn Lewis sales were £2.1bn, up 3% like-for-like on last year. Picture: PA (Image: pa)

Dame Sharon added: “Given what we have seen with energy bills and direct debits starting to land, we felt it was the right thing to do.”

She welcomed the UK Government’s move to cap gas and electricity bills at £2,500, saying “the energy freeze and the fact it’s in place for two years is positive for consumer sentiment”.

However, the group still warned over the outlook for the rest of the year.

READ MORE: John Lewis pledges to drop prices amid cost of living crisis

Dame Sharon said: “No-one could have predicted the scale of the cost of living crisis that has materialised, with energy prices and inflation rising ahead of anyone’s expectations.

“As a business, we have faced unprecedented cost inflation across grocery and general merchandise.”

She added: “We are responding to the cost of living crisis by supporting those who need it and by stepping up our efficiency programme.

“We are forgoing profit by making choices based on the sort of business we are, led by our purpose - ‘working in partnership for a happier world’ - by helping our partners, customers, communities and suppliers.”

The one-off payment will go to all of the company’s 76,000 workers, of whom around 60% are full-time and 40% part-time.

The group has already announced it will double its support fund for employees from £400,000 to £800,000 with a combination of grants and some loans for staff in financial difficulty, while in April it said it would give its employees a 2% pay rise and a 3% bonus.

The results showed like-for-like sales lifted 3% year on year to £2.1bn in the department stores in the first half, but fell 5% in its Waitrose stores to £3.6bn.

Shoppers have been cutting their spending on so-called big-ticket items and focusing instead on meals out and holidays as the cost squeeze tightens, according to the group.

It has also seen sales of items such as energy-saving lightbulbs “rocket”, Dame Sharon said.

John Lewis has invested £500m in pricing, including more affordable AnyDay range to help shoppers, it said.