Marks & Spencer (LON: MKS) will cut 7,000 jobs in response to the pandemic.
After a steep drop in sales, the retailer said it plans a “multi-level consultation programme” due to the ‘uncertain outlook’.
In-stores sales at Marks & Spencer fell 47.9% on the same period a year ago whilst online sales were up 39% and food sales grew by 10%.
In a statement, chief executive Steve Rowe, said:
“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. 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.”
The job cuts will be across UK stores central support centre and in regional management.
With a total fall of revenue over the last 8 weeks being 10%, the group said in a statement that the fall in smart clothing sales was dramatic due to the lack of weddings and smart events attended.
“The performance of store sales has varied widely across the estate with some of the newer out of town stores trading close to last year’s level of sales overall in recent weeks but legacy town centre stores and some shopping centres still heavily impacted by social distancing and reduced footfall.”
“Furthermore, with the closure of many workplaces and lack of social gatherings, the clothing sales mix has seen a substantial shift from office dressing and formal wear into casual clothing and leisurewear.”
Marks & Spencer has said they plan to create new jobs in online delivery warehouses.
This is the latest blow to the high street. Richard Lim, CEO of Retail Economics fears the job losses will continue once the government’s furlough period ends in October.
“Retailers were already battling with the pace of structural change facing the sector but the impact of the pandemic has been a step-change for the industry. Retailers remain in survival mode, preserving cash and hanging on for more sustainable levels of demand to return. But the way we shop has changed on a permanent basis for many parts of the sector almost overnight,” he said.
“The reality is that many more retailers will fail and the number of job losses will ramp up as government support is withdrawn. This is the calm before the storm.”
Shares in the retailer (LON: MKS) are trading at 114.94 (0926GMT).
