M&S to cut 1,200 jobs and close stores following worst sales performance for 9 years

Published on Wednesday 7 January 2009 09:04

AILING high street giant Marks & Spencer today unveiled its worst sales figures for almost a decade and plans to axe up to 1,230 jobs.

M&S said UK like-for-like sales tumbled 7.1% in the 13 weeks to December 27 – its biggest sales collapse since July-September 1999 – despite heavy price-cutting in the run-up to Christmas.

Click here to read Bill Jamieson's analysis of today's announcement

The company – which employs around around 70,000 staff in the UK – plans to close 27 stores with the loss of up to 780 jobs. Up to 450 more will go from its head office.

Of the stores to close, 25 are under-performing Simply Food outlets, and two are small main chain stores selling both food and clothes.

The cost-saving drive also involves changes to M&S's final salary pension scheme – by capping employees' annual increases in pensionable pay – and altering early retirement benefits for those who joined the scheme before 1996.

M&S hopes to cut costs by up to 200 million through the moves.

Executive chairman Sir Stuart Rose said: "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."

The cuts came as M&S said UK like-for-like food sales fell 5.2% over the period, while general merchandise – which includes clothing – was down 8.9%.

Union leaders expressed shock at the scale of the job cuts and called for urgent talks with M&S to discuss the redundancies.

John Gorle, national officer of Usdaw, said: "We want to talk to the company to get an understanding of the business case that has underpinned this decision.

"We are shocked at the severity of the cuts and we were not anticipating store closures. Our members will now be extremely worried.

"The company does not formally recognise trade unions but I hope they will meet with us to have a meaningful dialogue."

There were rumours that some workers could be laid off quickly but Mr Gorle said he would find it hard to understand why M&S needed to take such swift action.

He added that more than 35,000 jobs had been lost in the retail sector since November.

Paul Kenny, general secretary of the GMB, said the announcement proved that union member Tony Goode, dismissed last year after revealing plans to cut redundancy pay, had been telling the truth.

"M&S have been planning this mass sacking for some time and managers have in many cases selected who is going.

"This is against the law and ignores the employment rights of their staff.

"M&S must now enter into 90-day consultation with their employees before selecting those to be made redundant.

"They must make the business case for the closures and the cull in stores and at head office.

"M&S employees selected for redundancy before the end of the consultation period will have an automatic case for unfair selection for redundancy at an employment tribunal.

"GMB will urge all M&S workers so selected to contact the union so that we can enforce their rights to fair selection and 90 days' genuine

consultation."