Marks and Spencer to axe 7,000 jobs in next three months

Marks and Spencer has announced it plans to shed around 7,000 jobs over the next three months across stores, regional management and its support centre in response to a “material shift in trade”.

The retailer said that during lockdown it has learnt to work more flexibly, using the same staff to man both the food aisles and the clothing section of the stores.

It added that its store technology package developed in partnership with Microsoft has also enabled it to reduce layers of management and overheads in the support office.

The company said: “As previously outlined Clothing & Home trading in the stores remains well below last year, with online and home delivery strong.  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.”

Marks and Spencer said that it expects a significant proportion of the job losses will be through voluntary departures and early retirement.

“Concurrently we expect to create a number of new jobs as we invest in online fulfilment and the new ambient food warehouse and reshape our store portfolio over the course of the year,” it added.

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.”

Russ Mould, investment director at Manchester-based investment platform AJ Bell, said: “Marks & Spencer continues to make very tough decisions to right-size the business.

“It is very unfortunate to see thousands of job losses, adding to similar cuts among other major British businesses.

“Sadly, the retailer has no choice but to be as lean as possible to survive the current economic crisis and put it in a stronger financial position to recover longer term.

“The company should thank its lucky stars that it has a successful food arm, as that has helped to prop up trading during a very difficult time. Its clothing and home interests have struggled in the face of serious headwinds as demand fell off a cliff for office dressing and formal wear.

“The next big test for Marks & Spencer will be the imminent launch of its supply deal with Ocado for UK online food orders. A lot is riding on this joint venture being a success and further accelerating growth in Marks & Spencer’s food sales.

“This is the retailer’s chance to play catch-up with the online channel and failure to meet expectations could be disastrous for both management and the company’s already fragile share price.”

He added: “Marks & Spencer has been in turnaround mode for a long time and a lot of its effort has been spent trying to fix things rather than come up with new ideas.

“The Ocado deal is different as it is new territory for the group. Getting this venture off to a strong start could fuel optimism that the retailer is still capable of moving with the times rather than sinking into quicksand.”