Coronavirus: Marks & Spencer to cut 7,000 jobs after 'material shift' in trading

August 18, 2020

Marks & Spencer plans to cut 7,000 jobs over the next three months as part of a shake-up in the wake of the coronavirus crisis.

Most of the cuts will impact its 60,000-strong shop floor workforce, around 12% of whom will lose their jobs under the plans, while head office roles and regional management are also affected.

M&S said it was acting to reflect a "material shift" in trading prompted by the pandemic, as it also revealed a steep drop in sales.

The cuts are in addition to the 950 job cuts announced last month as part of changes to management structures, and follow other big redundancy announcements by the likes of Debenhams, Boots and John Lewis.

It brings the number of cuts announced by major retailers to more than 30,000 - meaning the sector has now seen the highest total impact across the economy since the lockdown in a jobs tracker compiled by Sky News.

M&S said clothing and homeware trading at its stores remained "well below last year" but online and home delivery demand was "strong".

It said overall performance in recent months was ahead of the scenario announced earlier this year, but there was still "substantial uncertainty about market conditions and the duration of social distancing measures" and it was retaining a "cautious approach".

M&S said the recovery of stores since the end of the lockdown had varied widely - and in recent weeks, some newer out-of-town locations have returned close to the levels of trading seen a year ago.

However, some high street and shopping centre locations were still "heavily impacted by social distancing and reduced footfall".

The closure of many workplaces and a lack of social gatherings meant there had been a "substantial shift from office clothing and formal wear into casual clothing and leisurewear".

The company added: "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."

It said the crisis had also shown how it could work "more flexibly and productively" with employees multitasking and moving between its food and clothing & home departments.

Meanwhile, a new store technology package developed with Microsoft has enabled it to "reduce layers of management and overheads in the support office".

M&S said the breadth of its job cuts reflected "the fact that the change has been felt throughout the business", adding that a significant proportion were expected to be through voluntary departures and early retirement.

Meanwhile, jobs are expected to be created as it invests in online delivery warehouses and plans to "reshape" its store network over the coming year.

M&S said: "The streamlining programme is an important step in delivering on our cost savings programme and ensuring we emerge from the crisis with a lower cost base and a stronger more resilient business."

The cuts bring to fruition a "never the same again" shake-up first revealed in April as the coronavirus crisis prompted the beleaguered company to accelerate a shake-up of its operations.

Chief executive Steve Rowe said: "These proposals are an important step in becoming a leaner, faster business set up to serve changing customer needs."

M&S tracked a 19.2% fall in group sales in the 19 weeks to 8 August compared with the year before, with clothing and home revenues down by 49.5% and food by 1.1%, while online demand grew 38.9%.

Within this, the trend had improved slightly in the most recent eight weeks as store reopenings took effect.

Clothing and home sales were still down by 29.9% in that period but food demand returned, with revenues up 2.5%.

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