M&S to shut 27 stores and cut 1,230 jobs

Marks & Spencer (M&S) today confirmed it will cut 1,230 jobs and close 27 stores after reporting one of its worst Christmas trading performances on record.
The retailer said it will shut 25 of its Simply Food stores and two of its smaller M&S branded stores following the sales decline.
Over the 13 weeks to December 27, UK likes-for-like sales, which strip out trade from new stores opened during period, fell by 7.1 per cent after an 8.9 per decline in general merchandise, which includes clothing, and a 5.2 per cent drop in food trade.
The group also warned that it now expected annual retail gross margins to be 175 basis points lower than last year as a result of increased discounting.









However, Sir Stuart Rose, chairman at M&S, today denied that the expected fall in margins was a profits warning and refused to be drawn on whether the company would pay a dividend, stating that the management would not make a decision until May.



Sir Stuart added that while pre-Christmas discounting, which included two one-day “spectaculars” when selected items were reduced by 20 per cent, would hit margins, he thought the chain did the right thing to “give customers a Christmas.” Over 56 million customers visited M&S over the festive period.
Yesterday, The Times exclusively revealed that M&S would axe 1,000 jobs to counter poor trading over the crucial festive season.
However, today's figure is worst than expected with 780 positions to go at the 27 stores set for closure as well as the 450 staff who will be made redundant at the company's head office.
The group will also cap annual increases in staff’s pensionable pay to 1 per cent and change early retirement benefits to cut costs.
Sir Stuart said today: “We are aware that the proposed changes set out above will be difficult for those members of staff impacted, but given that we expect challenging economic conditions to continue for at least the next 12 months we believe we are taking the right action to maintain the strength of our business.”
He added that there would “almost certainly” be no more store closures and that measures would affect under 1 per cent of the group’s 70,000 plus staff.
Moreover, Sir Stuart dismissed his or other top management’s positions were under threat at the company as a result of its recent performance, stating that if a plane was flying through a storm, getting rid of the pilot was not the best idea. Last year Sir Stuart provoked protest among some investors by taking the role of executive chairman, encompassing both his previous chief executive position and that of chairman. (from timesonline)

This puzzles me. It is quite normal for firms like M&S to be laying off large numbers of short term staff after Xmas and New Year. Happens every year.

So why are M&S making such a song and dance about it this year, what are they up to ?

Because this is on top of the normal seasonal staffing fluctuations; This is 1,230 permanent positions AND 27 stores, they don't shut stores every year, do they?

Troy McClure wrote:Because this is on top of the normal seasonal staffing fluctuations; This is 1,230 permanent positions AND 27 stores, they don't shut stores every year, do they?

Thats correct

Listening to an interview with the CEO/Chairman of M&S last night talking about these redundancies was interesting; not the facts being divulged, as we already knew those, but the delivery of them.

Clearly stating that the closure of the stores was a decision based on what was best for the business, very sad for staff, etc. etc. etc. Everything you'd expect to hear, but somehow delivered in a way different to what we, I at least, have come to expect. It was unapologetic, actually sounding sincere in that he was taking decisions based on business figures and not trying to wrap it up or spin it as somebody else's doing.

I got the feeling that over the years the man knew he'd kept stores trading with poor figures so as not to have to give bad news that might upset people, and as a result he knew his business had suffered with losses.

Maybe if the businesses hadn't felt so compelled to be seen to be doing well, with a shop on every high street, and if the cost of making people redundant when they actually were wasn't so, perhaps artificially' high, these retail businesses wouldn't have suffered such huge losses, and as a result effected far higher numbers of employees.

For a few years now the retail world has issued figures based on surveys that shops get through various trade mags etc where we are all asked questions like how was bussiness this year compared with last etc and I believe many retailers have not been honest because of pride or whatever.

I know I have read some surveys and thought that cant be right a 1% drop in trade when I know from my suppliers and from many other sources that they are 20-30% down etc

Maybe they were just all hoping that the turn around was just around the corner and it wasnt.

Now most of us have realised that their is a future but only by cutting costs (Labour in one) and adapting to the current climate with Better Prices, unfortunatly we cant do one without the other.

And in the case of the big multiples getting rid of deadwood shops that are not performing.