Coronavirus: M&S to axe around 7,000 jobs

Britain’s bellwether retailer Marks & Spencer (MKS.L) has announced in a statement that it will cut around 7,000 jobs.

It said that job cuts were part of a major shake-up of its stores and management following the severe impact the coronavirus crisis has had on UK high streets.

It confirmed that the roles will be cut over the next three months and losses will be spread across shops, regional management, and its support centre.

M&S said it also expects a “significant” number of roles will be cut through voluntary departures and early retirement. It reiterated that there will be some new jobs will be created as it focuses on investing in online warehousing and its new ambient food warehouse.

"In May we outlined our plans to learn from the crisis, accelerate our transformation and deliver a stronger, more agile business in a world in which some customer habits were changed forever,” said Steve Rowe, CEO at M&S.

“Three months on and our Never the Same Again programme is progressing; albeit the outlook is uncertain and we remain cautious. As part of our Never The Same Again programme to embed the positive changes in ways of working through the crisis, we are today announcing proposals to further streamline store operations and management structures.

“These proposals are an important step in becoming a leaner, faster business set up to serve changing customer needs and we are committed to supporting colleagues through this time."

Shares in M&S have cratered over the last few months due to coronavirus exacerbating existing issues the retailer has had with growth:

M&S has historically struggled over the last few years to get more people buying its clothes. Since the spread of the coronavirus caused stores to temporarily shutter and people to stay in their homes during lockdown, that only impacted revenue further.

While the UK government has eased the lockdown over the last two months, for many retailers it is still playing catch-up to lost sales. And for some, like M&S, it has laid bare its issues with its hard-hit clothing and home arm — both of which plunged 29.9% in the eight weeks since shops reopened. Store sales also fell 47.9% while online revenue rocketed 39.2%.

Analysts at Shore Capital Markets said the “unexpected update” from M&S “shows a tough performance but improving trends, as well as a further update on the change programme, which is deepening and accelerating the necessary adjustments that management believes the business needs if it is to stabilise and prosper.”

“Most significantly, from a current perspective, we welcome the announcement that M&S is ahead in terms of sales and most especially cash flows against the scenario set out at its preliminary results in May 2020.”

It said in a statement that it was “clear that there has been a material shift in trade.”

“Online Clothing & Home sales have performed strongly since the start of the year with an additional 1.9 million new customers. In the last 8 weeks, online sales have represented 41% of our total Clothing & Home sales,” it said

“There has been a substantial change in delivery mix, with c. 68% of orders delivered to home, compared with 29% the previous year. Growth has been enabled by a robust performance from our Castle Donington distribution centre, where the group has invested in substantial additional capacity.

“Following a successful relaunch in July, 8.2 million customers are now members of the new Sparks programme and over 800,000 have downloaded the M&S App since launch.”