M&S to cut 525 jobs

Marks & Spencer Group is set to scrap about 525 head office jobs as the UK’s largest clothing retailer moves to cut costs amid weak sales.

London - Marks & Spencer Group is set to scrap about 525 head office jobs as the UK’s largest clothing retailer moves to cut costs amid weak sales.

M&S will consult with workers over the cuts, which would represent about 15 percent of head office staff, the retailer said in a statement Monday. The changes should result in about a 1 percent annual reduction in domestic costs and a one-time charge of about 15 million pounds ($20 million).

The drive to cut costs comes as M&S strives to resurrect sales in its clothing business - which dropped 8.9 percent in its most recent quarter - and grapples with the cost of complying with the new national living wage. In addition to cutting staff in its headquarters, the company has also reduced premium pay for non-regular hours worked by its store-based workers to fund an increase in basic pay.

“M&S has to become a simpler and more effective organisation if we are to deliver our plans to recover and grow our business,” CEO Steve Rowe said in the statement. The proposals will allow M&S to make “bolder, pacier decisions, be more profitable and ultimately better serve our customers,” said the CEO, who is scheduled to outline his plans for the retailer’s international unit and its UK store portfolio on November 9.

About 260 of the jobs being eliminated will be salaried workers. About 200 contractors will also be axed, while the company won’t replace some staff when they leave.

The one-time charge for the cuts includes the cost of senior management changes made in May.

BLOOMBERG