The move to eliminate about one-tenth of the store chain’s workforce follows a 39% plunge in the clothing and home arm’s sales in the latest 13 weeks. A 2.5% gain in food sales failed to offset the impact, and uncertainty over the course of the pandemic and social distancing measures clouds future prospects, M&S said in a statement.
The shares rose as much as 2% in early London trading as investors reacted favorably to the prospect of more aggressive cost-cutting. They’ve fallen 46% so far this year.
The mainstay of the U.K.’s downtown shopping districts was already suffering from competition with online retailers and a shift toward fast fashion, and it has embarked on a series of restructurings.
Job Losses in British Retail
Top ten biggest job cuts announced since the pandemic began
Bloomberg Research
The U.K. suffered the biggest contraction of any major economy during the lockdown, with a 20.4% decline in output during the second quarter. Despite a rebound in June, consumer sentiment remains fragile and retailers have been paring jobs at a growing rate. Debenhams Plc, Walgreens Boots Alliance Inc.’s drugstores and John Lewis Partnership Plc, owner of the grocer Waitrose, are among others that have announced cuts.
Thousands of additional workers have been furloughed, but the government is under pressure to phase out support despite concerns about the near-term economic effect.
Online Boost
M&S said it expects some of the job cuts to occur through attrition and early retirement and also plans to add an unspecified number of new positions. As with other retailers, the company’s online operations have gotten a boost since the lockdowns began.
The retailer said in July that it planned to cut about 950 jobs from a total of 78,000. The new reductions will come on top of those. M&S has previously detailed plans to close about 100 stores, but Tuesday’s update included no further news on those measures.
“Importantly, these redundancies are not being driven by a new round of store closures (though we would not be surprised if that, too, were announced in due course), but by reducing staffing levels in the existing store footprint,” Morgan Stanley analysts said in a note.