John Lewis Partnership (JLP) is the U.K.’s largest employee-owned retail company and a poster-child for the model itself. In the past, prominent figures like Nick Clegg, former deputy Prime Minister of the U.K., had big dreams about a “John Lewis economy” where individuals had actual stakes in the companies they worked for. 

But things have taken a turn for the worse. Now, JLP is navigating murky waters amid a turnaround plan under chair Sharon White. There’s good news worth noting—the group made a profit before tax and bonus of £42 million ($54 million) in the 12 months to Jan. 27, 2024, compared with a whopping £78 million ($100 million) loss a year earlier, it said on Thursday. 

Despite the positive results, the “partners” are still losing out. They won’t make a bonus for a second consecutive year, raising questions about whether the model is sustainable in today’s challenging retail environment.

“We have made significant progress in the last year to return the business to profitability and delivered results that allow us to increase investment in our retail businesses; we expect profits to grow further this year,” JLP Chair White said in a statement. She added that the company will “unashamedly focus” on pouring money back into the company and improving overall pay (as opposed to one-off pay like bonus). 

Holding off on partnership bonus payments is unusual for the employee-centric company—it’s only the third time the group hasn’t awarded them since 1953, with last year being the second instance. It also comes at a time when a slew of layoffs have hit the retail space. Reports of possible cuts at John Lewis and Waitrose stores as part of cost-cutting efforts have also cropped up in recent times, although they haven’t taken effect yet.  

Inflation has certainly taken a bite out of the business worth £112 million ($143 million) last year, according to JLP, linked mostly to partner pay and other operational costs. In response, JLP managed to narrow costs down by £88 million ($113 million) by streamlining how its stores work. 

The company argues that its partners much prefer pay rises in the current environment. 

“At this point in our transformation we’re best served by investing in our business and Partners’ base pay. Most Partners believe that regular pay is more important, and we’re investing £116 million ($149 million) in Partner pay rises – the biggest in our history,” a JLP representative told Fortune. It also plans to stick with its partnership model, despite the upset around cutting the bonus again this year.

JLP has trimmed bonus payments in recent times such as in 2018, when it announced it would cut the bonus down from 6% of partners’ salaries to 5%. That was the lowest level since 1954, according to the BBC. At the time, the company’s profit was still in the positive triple-digits.

It’s unclear if JLP plans to pause bonuses in the future with its turnaround plan underway. 

New era for the partnership

White, who is set to leave the company in 2025, said in September that JLP’s big overhaul could take an additional two years to complete, pushing the current timeline to 2027-28. She cited inflation and high interest rates as the reason for the delay in completing the turnaround, which kicked off in 2020. 

Among White’s plans was also one to build and rent thousands of homes in an effort to diversify 40% of the company’s profits from outside retail by 2030. JLP’s CEO Nish Kankiwala has sought to change up parts of White’s initial plans, including by continuing to simplify the business. To date, the company has yet to complete any of its residential projects.

The U.K. economy is slowly bouncing back, thanks to the stronger retail spending and (limited) economic growth. That could boost businesses across Britain—including JLP’s more than 350 stores. Will it be enough to bring back the partnership bonus? If not, this could mark the end of the era for the “John Lewis Economy.”