The retailer announced that profits for 2008 fell 26 per cent to £279.6 million, while sales rose three per cent to £6.97 billion.
2009 has also been challenging so far for the stores and overall sales for the first five weeks were already 1.6 per cent lower than in 2007, while department stores slipped 6.8 per cent.
John Lewis also said despite the fall in the sales, it generated £591 million of cash last year, as compared with £546.3 million in 2007.
In its department stores, like-for-like sales at stores that were open in the previous year dropped 3.4 per cent. Revenue at the chain was flat at £2.81 billion.
To protect itself in the coming year, the retailer has delayed the majority of its plans. Although, the firm will still open its first department store in Wales in September, in Cardiff, and construction has begun on a store at the Olympic site in Stratford, scheduled to open in 2011.
John Lewis chairman Charlie Mayfield said: "2009 will be another very difficult trading year. Trading conditions worsened markedly during the year as the problems in the financial sector reduced consumer confidence to a low level."