Marks & Spencer to close 27 stores

Published on Wednesday 7 January 2009 09:25

MARKS & Spencer has today confirmed that it is to close 27 stores and cut up to 1230 jobs.

It made the announcement after recording its worst sales figures for nearly a decade, with like-for-like sales tumbling 7.1 per cent in the 13 weeks to December 27.

It said that 25 of its 355 "Simply Food" branded stores will close, as well as a further two small main chain stores, resulting in around 780 job losses.

A further 450 jobs will go in head office positions, representing 15 per cent of all head office positions.

The company has not so far revealed which Simply Food branches will close. The brand has four units in Edinburgh, at Waverley Station, Ocean Terminal, Craigleith and Straiton.

The poor sales performance – its worst since July-September 1999 – came despite holding a number of one-day "20 per cent off" sales in the run-up to Christmas that had seen shoppers flock to its stores.

It sold nearly 130 million items and had 56m customers in the ten days before Christmas.

The heavy discounting means that profit figures – which were not included in today's trading update – could be even worse, although chairman Sir Stuart Rose denied that today's announcement amounted to a profits warning.

Sir Stuart 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 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.

The company has invested heavily in a TV marketing campaign featuring celebrities including Myleene Klass and Take That which had aimed to boost sales over the Christmas season.

It has also relaunched its "not just food" adverts, which now feature celebrities including David Jason.

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."

It is now estimated that more than 35,000 jobs have been lost in the retail sector since November.