John Lewis boss Dame Sharon White said the current cost-of-living crisis is hitting the retailer harder than the pandemic and had sent it "back to the 1970s".
Higher staff levels compared to rivals and its employee-owned structure caused the crisis to be “probably more profound” than the Covid era, she said.
Consumers are spending less in stores as they have less disposable income due to the 40-year inflation high.
White 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.”
John Lewis Partnership, which also owns the high-end supermarket Waitrose, employs approximately 80,000 people, making it one of Britain’s largest employers.
White added that when margins begin to decline, John Lewis is one of the hardest hit – taking the retailer back to the context it found itself in the 70s.
All this means that John Lewis staff will likely not receive a bonus again this year after it was cut during the pandemic.
White informed workers that John Lewis would need a "substantial strengthening of performance, beyond what we usually achieve in the second half, to generate sufficient profit to share a partnership bonus with partners."
She added that there will be more difficult challenges to face over the next 12 months.
John Lewis recently announced it had generated a loss of £99mln in the first half of this year.
White's comments echoed similar gloomy remarks from Amazon.com Inc (NASDAQ:AMZN) owner, Jeff Bezos.
The multi-billionaire advised consumers to “batten down the hatches” during this time of economic uncertainty (read more).
In response to Goldman Sachs (NYSE:GS) chief executive David Solomon saying consumers should behave more cautiously as there is a good chance of a recession, the owner of the online retailer said warned consumers to adjust for difficult times.