M&S shares slip on job cuts

British retailer Marks and Spencer plans to cut a net 525 jobs from its London head office, it confirmed yesterday, as new CEO Steve Rowe seeks to simplify the business and reduce costs.

The clothing and food group also plans to reduce the number of roles permanently based in central London by about 400 across its IT and logistics functions.

It said the planned reduction in jobs, which follows a review of M&S’s organisational structure, would be achieved through a combination of fewer contractors, natural attrition and redundancies for M&S employees.

A formal consultation with affected staff will now begin.

“M&S has to become a simpler and more effective organisation if we are to deliver our plans to recover and grow our business,” said Mr Rowe.

“M&S has become too complex and inefficient and today’s proposals aim to address this by removing duplication, driving accountability and establishing clear, consistent processes; which in turn will strip out unnecessary costs.”

Mr Rowe, a 26-year M&S veteran who succeeded Marc Bolland as chief executive in April, has pledged to turn around M&S’s struggling clothing business by improving ranges and availability, cutting prices and offering fewer promotions.

However, his plan, outlined in May, came with a warning of a short-term dent to sales and profit and in July the 132-year-old group reported its worst quarterly clothing sales for a decade.

The proposed reduction in head office roles comprises existing vacancies, about 260 M&S roles and about 200 contractors. M&S currently employs more than 3,500 people working across seven UK head offices.

Its more than 71,000 staff in UK stores and supporting customer functions will not be affected by the proposed changes.

M&S said if the proposals go ahead they would deliver annualised operating cost savings of about 1% of the UK cost base.

However, there would be a one-off cost of £15m (€18m), which includes the changes to the senior management team Mr Rowe announced in May. The job cut plans come days after M&S announced a 14.7% pay rise for shop floor staff.

Mr Rowe said in May M&S’s other big strategic issues, including the size of its UK store estate and international plans, would be addressed in the autumn.

Down nearly 30% in the past year, M&S shares fell by over 1% yesterday.