Hope for online venture
M&S needs Ocado sparks to fly as 7,000 jobs axed
M&S has used celebrities like Holly Willoughby to promote its clothing range but sales remain subdued
Marks & Spencer, which has announced 7,000 job losses has a chance to re-invent itself through its online partnership with Ocado, according to a City analyst.
The ‘right-sizing’ of the retailer’s estate will be implemented over the next three months in a major shake-up of its operations.
Russ Mould, investment director at AJ Bell, says it has “no choice” but to be as lean as possible to survive the current economic crisis and it should be thankful it has a successful food arm to prop it up.
But he said it needs to move on from turnaround mode to developing new ideas. Getting the Ocado venture off to a strong start could fuel optimism that the retailer is still capable of moving with the times, he said.
The job cuts will include departures in the central support centre, in regional management, and in the stores, “reflecting the fact that the change has been felt throughout the business.”
The company said: “We expect a significant proportion will be through voluntary departures and early retirement.”
It expects to create a number of jobs as it invests in online fulfilment a food warehouse and reshapes its store portfolio over the course of the year.
The cost of the programme including redundancies will be reflected in a significant adjusting item to be included in the group’s half-year results.
In the year to date it has performed ahead of the scenario announced at the year-end in revenue and cash.
“However, at this early stage there remains substantial uncertainty about market conditions and the duration of social distancing measures, and we are retaining a cautious approach to planning for the balance of the year.”
M&S Food sales have built steadily from the shifts in demand and closure of travel locations at the outset of the crisis. In the last 13 weeks total food sales have increased 2.5%.
In clothing revenue was down 38.5% in the last 13 weeks. In the eight weeks since store re-opening total sales have been down 29.9% with trends steadily improving. In those eight weeks store sales were down 47.9% and online has continued to perform strongly up 39.2% on last year.