While food sales continue strongly, Marks & Spencer is set to cut 7,000 jobs across their clothing and home departments.
The company stated, 'We are today announcing important proposals to further streamline the business both at stores and management level.
'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.
'We have also learnt that we can work more flexibly and productively with more colleagues multi-tasking and transitioning between Food and Clothing & Home. The deployment of our leading store technology package developed in partnership with Microsoft has also enabled us to reduce layers of management and overheads in the support office.
'As a result we are today embarking on a multi-level consultation programme which we anticipate will result in a reduction of c. 7,000 roles over the next 3 months. These will include departures in our central support centre, in regional management, and in our UK stores, reflecting the fact that the change has been felt throughout the business.
'We expect a significant proportion will be through voluntary departures and early retirement. In line with our longstanding value of treating our people well, we will now begin an extensive programme of communication with colleagues.
'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.
'The cost of the programme including redundancies will be reflected in a significant adjusting item to be included in the group’s half-year results. The streamlining programme is an important step in delivering on our cost savings programme and ensuring we emerge from the crisis with a lower cost base and a stronger more resilient business.'
Food business showing good year on year growth
M&S Food sales have built steadily from the shifts in demand and closure of travel locations at the outset of the crisis. In the last 13 weeks total Food sales have increased 2.5%.
In that same period like-for-like sales excluding the impact of the closure of hospitality and travel franchise units were up 10.6%, with an improving trend as more locations recover and performance has regained momentum as customers have bought back into our quality, fresh food offer and investment in range and trusted value.
The transition to taking over the supply agreement with Ocado Retail is on track for September and we are beginning to see the benefits as planned in the form of trading terms and the launch of over 500 new products in M&S stores from the expanded online range created for the switchover.
We are making good progress in our ‘Vangarde’ supply chain effectiveness programme working with our logistics partner GIST, along with the new ambient food warehouse in Milton Keynes with our partner XPO Logistics.
Chief Executive Steve Rowe commented, “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.”