Marks & Spencer to cut 7,000 jobs in hit to UK workers

Bloomberg

Marks & Spencer Group Plc plans to cut about 7,000 jobs after its clothing business was hit hard by the coronavirus lockdown, adding to the toll of lost employment in the UK retail industry.
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 clouds future prospects, M&S said.
After a rise in early London trading the shares fell as much as 4.9% amid concerns about M&S’s troubled clothing and home division. They’ve lost almost half their value this year.
The benefits of cost-cutting won’t outweigh the negatives for investors until there’s a genuine improvement in the retailer’s clothing and home unit, Peel Hunt analyst Jonathan Pritchard said.
The mainstay of the UK’s downtown shopping districts was already suffering from competition with online retailers and a shift towards fast fashion, and it has embarked on a series of restructurings in the past decade.
The UK 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.
Since the pandemic began, UK retailers have announced more than 35,000 job cuts. They include Debenhams Plc, Walgreens Boots Alliance Inc’s drugstores and John Lewis Partnership Plc, owner of the grocer Waitrose.
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.
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. The largest portion of the reductions will be in the head office. As with other retailers, the company’s online operations have gotten a boost since the lockdowns began.