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M&S's 10% job cuts add to dire few weeks for retail sector

Even before M&S and Debenhams cuts in recent days, total high street job losses have topped 114,000 so far this year

Marks and Spencer Group PLC -

Marks and Spencer Group PLC’s (LON:MKS) plans to cut around 10% of its workforce adds to masses of painful cuts in the sector in recent months.

The food and clothing chain added 7,000 jobs cuts to nearly 1,000 last month, equating to around one in ten of its total headcount, and around 12% of the cuts are thought to be facing its 60,000-strong shop-floor workers over the next three months.

This round of job losses takes the number of announced retail sector redundancies to around 24,000 for the past month and a half.

In July and August the retail sector’s cuts include:

Before the cuts announced by M&S and Debenhams, total job losses announced by the retail sector were already topping 114,000 so far this year, according to data from the Centre for Retail Research (CRR) that goes up until mid-August. 

Of this, 42,817 jobs have been lost to companies going into administration and 61,543 from restructuring, rationalisation, streamlining, rightsizing, or whatever new terms for job losses is being employed.

Some 13,664 stores have been closed, the CRR said, adding that “we do not yet know how many of these will actually re-open at all, in view of the fact many shoppers seem to be avoiding the high street at present”. 

Back in March, the centre had forecast that 20,622 stores will close in 2020 versus 16,073 in 2019 and job losses will rise to 235,704 against 143,128 last year.

Some stores may reopen after pubs, cafes and restaurants re-open. 

“It could take much longer before we know how many shops remain in business. Judging the impact of coronavirus finally on retailing may take a little more time, because it is not primarily about corporate announcements,” the research group said.

The coming of the coronavirus pandemic has accelerated and exacerbated previous trends, analysts and sector watchers say. 

For M&S, most of the cuts are being aimed at its 60,000 shop floor workers, plus some in its support centre, regional management and head office too.

For the food and clothing chain this represents a huge step from the 950 job cuts that it thought would be enough only a month ago. 

Management said there had been a material shift in trading since May when stores reopened after the coronavirus lockdown, plus a realisation “that we can work more flexibly and productively with more colleagues multi-tasking” and working across both the food and general retail sections, the retailer said.

“M&S has realised it needs to act now if it wants to secure the longevity of the business,” said analysts at Hargreaves Lansdown.

“Coronavirus has exacerbated existing fault lines – namely that shopping habits have changed and M&S has been slow off the mark meeting those shifting demand patterns.”

Debenhams put it even more simply: trading is “a long way from returning to normal” and the embattled group said it needed to align store costs with more “realistic expectations” for how things will continue.

Like M&S, Dixons Carphone boss Mark Allsop framed his restructuring plans as being designed for a long-term shift to “create a flatter management structure and make it easy for our customers to shop with us”.

Some staff are being shifted to its virtual ShopLive shopping service, where customers can get advice over a video link from their home computer or smartphone.

With the furlough scheme running until October, there could be more rounds of redundancies in the autumn.

Other retailers that have not unveiled big job cuts, or not yet anyway, include JD Sports (LON:JD.), though it seems inevitable that some will go after it put its Go Outdoors arm into administration and them bought it back; Card Factory (LON:CARD), which having furloughed 90% of staff has since opened more than 1,000 of its stores; Mothercare (LON:MTC), which had already restructured before the pandemic hit; similar for N Brown (LON:BWNG), which has been moving toward a digital-first strategy but announced 120 job cuts in March; while TheWorks.co.uk PLC (LON:WRKS) was planning to open all of its stores with no mention of cuts. 

Quick facts: Marks and Spencer Group PLC

Price: 142.15 GBX

LSE:MKS
Market: LSE
Market Cap: £2.78 billion
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