Britain’s M&S Plans to Cut 7,000 Jobs in Latest Blow to Retail Sector

August 18, 2020 Updated: August 18, 2020

Retailer Marks & Spencer will cut a further 7,000 jobs, the company said on Tuesday, as the CCP virus crisis deals another blow to Britain’s beleaguered retail sector.

The jobs to go are in UK stores and within regional management, and will be cut over the next three months.

The clothing and home trading divisions in the company’s stores remained weak last year, though online and home delivery sectors were strong, said the retailer, which has a UK workforce of about 78,000.

“It is clear that there has been a material shift in trade and whilst it is too early to predict with precision where a new post-COVID sales mix will settle, we must act now to reflect this change,” M&S said in a statement.

Reinvention

The 136-year-old M&S is seeking to reinvent itself after decades of failed attempts. In May, the company said the CCP (Chinese Communist Party) virus crisis would indelibly change its business.

M&S said in a statement then that it would accelerate its turnaround plan for a “more agile business in a world that will never be the same again” following the virus crisis that had made the previous year’s progress look like “ancient history.”

Marks and Spencer logo seen on an advertisement outside of a store in London
Pedestrians walk past a Marks & Spencer’s store on Oxford Street in London on April 12, 2001. (Sion Touhig/Newsmakers)

M&S said the virus crisis had shown that the company could work more flexibly and productively with more employees multitasking and switching between the food and clothing, and home divisions.

Sales had varied, across outlets, however, with traditional “legacy” stores in town centers and shopping centers being hit hard by low footfall and social distancing during the pandemic, it said.

Though some newer out-of-town outlets had not done as badly, reduced social gatherings and workplace closures during the lockdown period had affected dressing habits, triggering an unforeseen “substantial shift” in clothing sales from formal wear and office dressing to leisure and casual wear, it said.

Sales promotions were able to shift some surplus stock, and the company will “hibernate” other stock for sale next year, it said.

M&S said it was on track to launch an online food service next month through its partnership with online supermarket Ocado, which will include the launch of 500 new in-store products from its increased online range.

The company’s increased use of technology to improve supply chain effectiveness, along with a new national food distribution warehouse in Milton Keynes, is also expected to assist profitability.

Last month, M&S shed 950 store management jobs affecting roles in central support areas and in property and store management.

The cuts add to thousands of job losses already announced by other major British retailers, including Boots, John Lewis, Dixons Carphone, and WH Smith.

Union Criticism

The new cuts have met with criticism from trade unions.

Usdaw, the trade union of shop, distributive, and allied workers, in an online petition statement called for M&S to engage in urgent talks to help “save jobs and restructure more responsibly.”

The online petition, directed at M&S Chief Executive Steve Rowe, says staff have been “kept in the dark” over the impending restructuring, which is set to see the closure of 100 stores by 2022.

Usdaw said workers did not know how long they would have their jobs and cited this as a “cruel” way to treat a loyal workforce who had contributed over the years to brand image by delivering the “hallmark” high customer service standards M&S is known for.

M&S says it expects a significant proportion of its cuts to be made through voluntary redundancies and early retirement, however, and plans an “extensive program of communication with colleagues” over the cuts, it said.

“We are committed to supporting colleagues through this time,” Rowe said in a statement.

M&S said that at the same time as the planned cuts it expected to create some new jobs by expanding its online services and investing in the new Milton Keynes warehouse.

“These proposals are an important step in becoming a leaner, faster business set up to serve changing customer needs,” Rowe said.

Sales and Shares Down

M&S share prices and sales have been severely affected by the CCP virus pandemic.

Shares were down 2.8 percent at 9:18 a.m. BST on Tuesday, extending 2020 losses to almost 50 percent.

Group sales across divisions were down nearly 20 percent year-on-year in the 19 weeks to Aug. 8, which included part of Britain’s lockdown period, whilst clothing and home sales were down almost 50 percent.

In the eight weeks since stores reopened, clothing and home sales were down by almost a third.

Overall store sales were down almost 50 percent, while online sales were up almost 40 percent.

M&S food stores, however, which traded throughout the lockdown period, saw sales increase by 2.5 percent in the latest eight weeks.

The firm said it was retaining a cautious approach to planning for the rest of the year.

Reuters contributed to this report