UK retail giant Marks & Spencer announced on Tuesday (August 18) that it will cut 7,000 jobs in the next three months due to a huge drop in retail store sales.
A drop in sales particularly in the Clothing and Home sectors of the business during the Covid-19 pandemic led to huge losses for the company and resulted in eventual job cuts.
Marks & Spencer currently has over 78,000 employees in their business of selling clothing, food, and household products.
The London-based retailer said the job cuts will be both in stores and management levels particularly in the central support centre, in regional management, and their UK stores.
“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,” the company said in a statement.
Mark and Spencer 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.”
Clothing and Home sectors down but recovering
Two of the most hard-hit sectors of the business, Clothing, and Home, reported a 38.5% drop in revenue in the last three months.
In the eight weeks since store re-opening last June, total sales have been down 29.9% with trends steadily improving. The company said in the eight weeks, store sales were down 47.9% while online has continued to perform strongly up by 39.2% on last year.
The retail company said the closure of many workplaces and lack of social gatherings shifted the clothing sales mix from office dressing and formal wear into casual clothing and leisurewear.
Food business remain unaffected, shows an increase in sales
Despite the closure of various store locations and shifting demands caused by the Covid-19 pandemic, food sales remain unaffected as it increased by 2.5%.
Even if hospitality and franchise units of the company closed amid the lockdowns, sales were up by 10.6% with an improving trend as more store locations recover.
The transition to taking over the supply agreement with Ocado Retail is on track for September as the company is beginning to see the benefits of trading terms and the launch of over 500 new products in M&S stores from the expanded online range created for the switchover.
Marks & Spencer shifts to online, digital stores
To further address the challenges of the pandemic, the company made use of a transformation strategy by delivering sales through digital channels.
The retail company reported that online Clothing and Home sales have performed strongly since the start of the year with an additional 1.9 million new customers. In the past two months, online sales have represented 41% of their total Clothing & Home sales.
Around 68% of orders, meanwhile, are home deliveries compared with 29% the previous year. Following a successful relaunch in July, 8.2 million customers are now members of the new Sparks CRM programme and over 800,000 have downloaded the M&S App since launch.
The company said international sales have performed ahead of the Covid-19 scenario, primarily driven by strong online sales and an improvement in franchise shipments in recent weeks.
But the company said it is too early to know if this good performance of international sales will be sustained as trading in several markets has been volatile with the re-imposition of local lockdowns and closures affecting trade.
Despite the current problems set by the new normal during the pandemic, Marks & Spencer said they are still expecting to create many new jobs as they invest in online fulfillment, the new ambient food warehouse, and in reshaping store portfolio over the year.
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