Around 75,000 employees of Marks & Spencer face slashed bonus pay-outs this week despite the retail giant achieving £1 billion profits for the first time in a decade.
M&S - which had a disappointing Christmas amid darkening economic clouds - paid out a record £91 million last year to staff, with chief executive Sir Stuart Rose's bonus topping £2.6 million.
However, it has been reported the pot could be slashed to less than £25 million as the group misses its targets for financial performance.
Its fortunes contrast with rival John Lewis, which has paid out a record £181.1 million to staff - 18 per cent ahead of the previous year.
M&S, which declined to comment, last achieved profits of £1 billion in 1998 under Sir Richard Greenbury.
A consensus of analyst forecasts puts pre-tax profits for the 12 months to March 31 at £989 million, although the firm faces a profits blow in the current year as consumers rein in spending amid soaring household bills.
Sir Stuart is expected to warn tomorrow trading remains at its toughest for a decade and difficult conditions could continue until 2010.
In January, M&S said third quarter like-for-like sales dropped 2.2 per cent - its first fall in nine quarters - and warned of further pain in the first serious blow to Sir Stuart's turnaround of the previously struggling business.
M&S is the UK's biggest clothing retailer by value and volume, but City experts expect it to have suffered further sales declines in the poor weather since Christmas, after gloomy updates from fellow high street big guns.
Investec Securities analyst David Jeary said: "After a disappointing Christmas M&S cannot have escaped the effects of poor weather in March on its clothing business."
The company is reviewing its food business as it struggles with heavier competition, and could unveil changes such as more product innovation and a decision to sell non-M&S products for the first time.
Meanwhile, it is reported former M&S food rival Safeway may be about to challenge Tesco's US venture, Fresh & Easy.
Safeway, which sold out its UK operation to Morrisons two years ago, is this week launching a new small-sized grocery shop.
Von's, a subsidiary of Safeway in southern California, has opened a 15,000 sq ft outlet in Long Beach. The site is six miles from a planned Fresh & Easy store.
The new store is said to be a slightly more upmarket outlet compared to the Tesco opera-tion to reflect the customer demograph in the suburb of Los Angeles. It includes a fresh bakery, deli, meat department with on-site butcher, fresh produce and wine cellar. It has an in-store Starbucks.
Unlike Fresh & Easy, which sells own-label produce, Von's has decided to stock the most-popular brands from its main supermarkets - although the emphasis on fresh food is a ploy favoured by the Tesco subsidiary.
It is thought if the pilot is a success it could be rolled out across southern California and possibly other parts of the US.
Asda parent Wal-Mart is keeping tabs on the situation and is thought close to launching a small format store of its own.
Tesco has opened 60 Fresh & Easys to generally good reviews although its roll-out programme has been put on hold because of the current US consumer spending difficulties.