The corona crisis accelerates the reorganization plans at Marks & Spencer:
the British retailer wants to make three years progress in one year. That will cost another 950 jobs.
Both at the head office and in the stores, Marks & Spencer has decided to work with fewer employees, reports.
The 950 jobs at risk represent 1.2% of the total of 78,000 jobs at the retailer. M&S was already working on a restructuring program that included store closures and cost savings.
This is now being accelerated to become a stronger, leaner company. Under the title ‘Never The Same Again’, the British icon aims to make three years of progress in one year. Speed and flexibility are the key words.
Marks & Spencer has been hit hard by the corona crisis. Food stores remained open but fashion sales fell to a low of 84% in May and the retailer fears that some consumer habits have now changed forever.
The company was lagging behind in e-commerce and had been struggling for some time due to fierce competition from Primark in the high street and Asos online.
Marks & Spencer is not the only British retailer in trouble: colleagues such as Ted Baker, John Lewis, Boots, Debenhams, Harrods and Pret A Manger have also recently announced store closures and redundancies.
Levi’s to cut 700 jobs
Levi’s is cutting 700 jobs in its offices, or about 15% of the workforce. As a result of the corona crisis, turnover of the jeans brand fell by no less than 62% in the past quarter and uncertainty remains.
The U.S. jeans brand Levi Strauss, better known as Levi’s, saw sales plummet to 498 million dollar (439 million euros) in the three months to the end of May, compared to 1.3 billion dollar (1.15 billion euros) a year earlier.
The 62% drop in turnover was also accompanied by a loss of 364 million dollar (321 million euros). Levi’s recorded a modest profit of 29 million dollar (26 million euros) last year.
The main culprit is the corona-pandemic: the inventory costs of the closed stores alone amounted to 87 million dollars (77 million euros).
E-commerce via the company’s own webshops rose by 25%, but that still only accounted for 15% of quarterly sales. In the meantime, over 90% of the stores have reopened and sales are picking up better than expected, while online sales continue to grow strongly.
Nevertheless, CEO Chip Bergh points to continuing uncertainties, and expects a significant negative impact on the rest of the year. The company has decided to cut 700 office jobs.
That’s about 15% of the company’s workforce and should generate savings of around 100 million dollar. Although the final plans will vary from country to country and will be subject to the applicable consultation procedures.
The jeans brand says it is going to focus more on online sales and wants to use shops more and more as small, local distribution centres and pick-up points. In this way, it hopes to reduce inventory costs.
It’s a striking change of direction, because it was only a year ago that Levi’s announced to open more of its own stores: the plan was to open 100 new stores, mainly in Europe and China.
Levi’s also returned to the American stock exchange last year, boosted by the renewed popularity of jeans
Burberry cuts 500 jobs
Burberry is going to cut 500 jobs, 150 of which in its British headquarters. Along with other measures, this should save the luxury brand 60 million euros annually.
The group’s retail sales have dropped 48 % in the past three months, In Europe and the Middle-East, the drop was as big as 75 %. In its British home market,
the luxury brand suffered from the decrease in tourists and the fact that stores have been closed for longer than throughout the rest of Europe.
It will be in Britain, therefore, that Burberry will take the toughest measures. 150 of the 3500 employees in the United Kingdom will lose their jobs.
Stores may lose some staff, while more staff working from home will allow the company to reduce the amount of office rent it pays.
The situation in Hong Kong is as of yet too uncertain to make reliable forecasts, Burberry said: sales have fallen dramatically due to the tensions with China and the coronavirus outbreak.
COO Julie Brown only said that the company “is evaluating” the situation in the area.
All measures combined should be able to lower the company’s costs by 55 million pounds (60 million euros) per year – a sum that will be reinvested in marketing (pop-up stores, digital campaigns and events).
These new cuts come on top of an earlier set of measures that was designed to save 140 million pond (150 million euro).
