Marks & Spencer to cut 7,000 jobs after Covid-19 hits sales – business live | Business
Marks & Spencer to cut 7,000 jobs after Covid-19 hits sales – business live | Business
Rolling coverage of the latest economic and financial news, as high street chain M&S announces streamlining programme, and hefty job cuts. Skip to main content The Guardian – Back to home Support The Guardian Available for everyone, funded by readers Contribute Subscribe Contribute Search jobs Sign in My account Account overview Profile Emails & marketing Settings Help Comments & replies Sign out Search switch to the International edition switch to the UK edition switch to the US edition switch to the Australia edition current edition: International edition News Opinion Sport Culture Lifestyle Show More News Coronavirus World news UK news Environment Science Global development Football Tech Business Obituaries Opinion The Guardian view Columnists Cartoons Opinion videos Letters Sport Football Cricket Rugby union Tennis Cycling F1 Golf US sports Culture Books Music TV & radio Art & design Film Games Classical Stage Lifestyle Fashion Food Recipes Love & sex Health & fitness Home & garden Women Men Family Travel Money What term do you want to search? Search with google Make a contribution Subscribe International edition switch to the UK edition switch to the US edition switch to the Australia edition Search jobs Holidays Digital Archive Discount Codes Guardian Puzzles app The Guardian app Video Podcasts Pictures Newsletters Today’s paper Inside the Guardian The Observer Guardian Weekly Crosswords Facebook Twitter Search jobs Holidays Digital Archive Discount Codes Guardian Puzzles app Business live Eurozone Marks & Spencer to cut 7,000 jobs; Walmart sales surge – business live
Rolling coverage of the latest economic and financial news, as high street chain M&S announces streamlining programme, and hefty job cuts
Latest: US giant Walmart does well Full story: M&S cuts 7k jobs in next three months Breaking: 7,000 jobs to go at M&S Jobs at risk in UK stores, central support and regional management Clothing sales down 30% since stores reopened LIVE Updated
A Marks and Spencer store in central London. Photograph: Tolga Akmen/AFP/Getty Images Graeme Wearden
Tue 18 Aug 2020 13.40 BST First published on Tue 18 Aug 2020 07.15 BST
Share on Facebook Share on Twitter Share via Email Key events Show 1.40pm BST 13:40 US dollar on the slide 1.19pm BST 13:19 Lunchtime Summary 12.42pm BST 12:42 35m Eat Out to Help Out meals claimed 12.12pm BST 12:12 Walmart smashes forecasts 10.37am BST 10:37 Labour: Government must act to save high street jobs 8.27am BST 08:27 UK’s job cuts misery 7.58am BST 07:58 Full story: M&S to shed 7,000 jobs in latest blow to UK retail Live feed Show 1.40pm BST 13:40
US dollar on the slide Back in the markets, the US dollar is weakening against other major currencies.
This has driven the pound up nearly a cent, to $1.3194 — its highest level since early March.
The euro has hit its highest level in over two years, at $1.194.
The weakness of the dollar is also driving commodity prices higher, with gold back over $2,000 per ounce.
Daniel Moss (@DanielGMoss) The floodgates appearing to reopen for $USD as the $DXY plunges below 92.50 for the first since May 2018 $AUDUSD and $EURUSD simultaneously bursting to fresh yearly highs on the back of relentless #USDollar selling pic.twitter.com/oJ5taim91M
August 18, 2020 The dollar appears to be suffering from predictions that US monetary policy will remain extremely loose for some time, given the damage caused by Covid-19.
Fawad Razaqzada , market analyst with ThinkMarkets , explains:
The dollar continues to fall with investors expecting the Fed to maintain its expansionary monetary policy for a long time, owing to concerns the persistence of Covid-19 will weigh on economic recovery.
The greenback is also suppressed because of the lack of haven demand for the reserve currency, with investors evidently favouring foreign currencies, gold and bitcoin instead
Facebook Twitter 1.19pm BST 13:19
Lunchtime Summary
Marks & Spencer on Oxford Street. Photograph: Henry Nicholls/Reuters
A quick recap
The jobs crisis in the UK retail sector has deepened, with Marks & Spencer announcing plans to cut 7,000 jobs before Christmas . M&S is reducing roles at its stores, in its central operations and among regional managers, after a slump in sales during the pandemic.
M&S’s clothing sales are down 30% since its stores reopened , with rising online sales failing to make up for a plunge in revenues from its stores.
CEO Steve Rowe said the changes would create a “leaner, faster” business – but shares are down 4% today.
Analysts warned that other retailers will follow M&S’s move and restructure their own operations, meaning more job losses in traditional retail roles.
The opposition Labour party blamed government inaction , and urged ministers to provide targeted support for retail. In other news…
The US supermarket giant Walmart has smashed sales forecasts , after nearly doubling its online sales during the pandemic. The UK’s discount meals offer is proving very popular … China is threatening Australian wine with new tariffs , in an anti-dumping probe Mining giant BHP Billiton has bowed to pressure from climate activists and agreed to divest its thermal coal mines Updated at 1.33pm BST
Facebook Twitter 12.42pm BST 12:42
35m Eat Out to Help Out meals claimed Back in the UK, the government has announced that at least 35 million discounted meals have been devoured during the Eat Out to Help Out scheme’s first fortnight.
Rishi Sunak’s attempt to protect jobs in the hospitality sector, by offering a discount of up to £10 per head on food and soft drink, is proving rather popular.
In the first week, 10.5m meals were claimed back , and the full total claimed has now jumped to 35m (that’s not the total number of meals benefiting from the discount, though, as some businesses may not have claimed back yet).
The Treasury adds that 85,000 restaurants are offering the scheme. It’s received claims from 48,000 outlets, and is urging the rest to get the paperwork in quickly so it can pay them the discount ( and add their meals to its running total ).
Chancellor of the Exchequer Rishi Sunak said:
“Today’s figures show that Britain is eating out to help out – with at least 35 million meals served up in the first two weeks alone, that is equivalent to over half of the UK taking part and supporting local jobs in the hospitality sector.
“To build back better we must protect as many jobs as possible, that is why I am urging all registered businesses to make the most of this by claiming back today – it’s free, simple and pays out within 5 working days.
Facebook Twitter 12.17pm BST 12:17
Shares in Walmart have rallied sharply in premarket trading, up more than 5% to record levels, as investors cheer its forecast-beating results.
Here’s CNBC’s take:
Walmart said Tuesday second-quarter earnings got a boost as shoppers rushed in to spend their stimulus checks, while its online business continued to surge during the pandemic.
Walmart’s e-commerce sales in the US shot up by 97% as customers had packages shipped their homes and used kerbside pick-up. The retailer’s US same-store sales grew by 9.3% in the second quarter, fuelled by purchases of food and general merchandise.
Shares were up nearly 6% in premarket trading.
Updated at 1.18pm BST
Facebook Twitter 12.12pm BST 12:12
Walmart smashes forecasts The US retail giant Walmart has also smashed forecasts, as it rode out the pandemic.
Walmart grew its sales by 9.3% in the last quarter, led by “strength in general merchandise and food”. Its eCommerce sales surged by 97%, as more consumers ordered online.
Walmart says:
The company’s net sales and operating results were significantly affected by a continuation of the global health crisis. Increased demand for products across multiple categories led to strong top-line and gross margin results.
While revenues were slightly ahead of estimates, earnings smashed forecasts – at $1.56 a share, versus $1.25 expected.
Jeremy (@mehabecapital) (Earnings) Walmart( $WMT ) Actual.EPS=1.56 vs Est.EPS=1.25, Actual.Rev=137.7B vs Est.Rev=135.29B pic.twitter.com/e6fUFxeTAh
August 18, 2020 Updated at 1.18pm BST
Facebook Twitter 12.03pm BST 12:03
Sticking with the US, retailer Home Depot has posted a surge in sales during the lockdown.
Like-for-like sales surged by 23.4% in the May-July quarter, as Americans turned to DIY tasks, snapping up new paint and tools. That’s more than double analyst estimates.
Updated at 12.03pm BST
Facebook Twitter 11.43am BST 11:43
M&S’s struggles are a sharp contrast to the huge success of Amazon, which is hiring more people, in the US.
The Wall Street Journal has the details:
Amazon.com is expanding its physical offices in six US cities and adding thousands of corporate jobs in those areas, an indication the tech giant is making long-term plans around office work even as other companies embrace lasting remote employment.
Amazon is preparing to add 3,500 corporate jobs across hubs in New York, Phoenix, San Diego, Denver, Detroit and Dallas, the company said Tuesday. The plans include 2,000 jobs at the historic building in Manhattan that once housed the Lord & Taylor flagship department store.
Updated at 1.19pm BST
Facebook Twitter 11.08am BST 11:08
Sophie Walker, CEO of the Young Women’s Trust, points out that women will be disproportionately hit by M&S’s job cuts, as they make up 70% of the workforce ( details here ).
Sophie Walker (@SophieRunning) Massive job losses at Marks and Spencer means thousands of job losses for women, who make up so much of the retail sector. As the furlough scheme ends it is vital firms record redundancy by sex so we can clearly see the impact of Covid on women, who have already been hit so hard.
August 18, 2020 Sophie Walker (@SophieRunning) This data should then also be broken down via race, ethnicity and disability so we can see the particular impact of this tsunami of unemployment on minoritised women across all backgrounds. This pandemic is deepening already entrenched inequalities. Govt needs to see that and act
August 18, 2020 Facebook Twitter 11.03am BST 11:03
Unions are also urging the government to act to protect high street jobs.
The Union of Shop, Distributive and Allied Workers (Usdaw), the UK’s fifth-largest trades union, has called for urgent talks between the company, the government and unions.
Dave Gill, Usdaw National Officer, says the UK also needs an effective industrial strategy:
This job loss announcement is yet another devastating blow for M&S staff and yet another bombshell for our high streets. The government has a clear choice; do they want to see the high street go to the wall, or do they want to help save it?
What the retail sector needs now is a tripartite approach of the government, unions and employers working together to develop a much-needed retail recovery plan. We have long called for an industrial strategy for retail to help a sector that was already struggling before the coronavirus emergency. Now the situation is much worse.
Here’s Usdaw’s plan to help the high street:
Fundamental reform of business rates. The government committed to a review of business rates earlier this year, but assurance is needed that this will not be delayed further. An immediate and comprehensive review of rental values and lease arrangements. In the short term measures are needed to prevent commercial landlords taking legal action for rental defaults during the lockdown period. In the medium term, a rebalancing of the relationship between landlords and tenants is required. Reform of UK tax law to ensure that companies pay their fair share of tax through tackling tax avoidance and the use of offshore havens, with the aim of creating a level playing field between online and high street retailers. Funding for local authorities so they can invest in their local economy, transport networks and high streets. We cannot revive our high streets if core services continue to be undermined Investment in skills for retail workers, including through union learning and high-quality apprenticeships. This should include an in-depth assessment of emerging trends and potential skills shortages/gaps within the sector. A new deal for retail, distribution and home delivery workers based around a real living wage and guaranteed hours. Usdawunion (@UsdawUnion) #MarksAndSpencer staff shocked by 7,000 more job losses – #Usdaw calls for urgent talks and the Government to help save the high street #SaveOurShops https://t.co/fw3UavVwiz
August 18, 2020 Updated at 1.20pm BST
Facebook Twitter 10.37am BST 10:37
Labour: Government must act to save high street jobs The Labour party has blamed government ‘incompetence’ for the job cuts at M&S and other retailers.
Lucy Powell MP, Labour’s shadow minister for business and consumers, says the restructuring shows the need for targeted support for sectors worst hit by the pandemic:
These job losses are devastating for the workers involved yet they also tell a much bigger story about the threat to our high streets. The scale of job losses was not inevitable but the incompetence of this government means we’re now seeing wave after wave of redundancies, and store closures.
Labour has called for a Hospitality and High Streets Fightback Fund to support businesses in distress and to save jobs now. Ministers must change course.
Updated at 1.21pm BST
Facebook Twitter 10.28am BST 10:28
Employees at other high street retailers will be watching events at M&S nervously.
Although every chain is different, they all face the consequences of the accelerated move towards online shopping and away from store visits – especially during the ongoing pandemic.
Freddy Khalastchi, business recovery partner at accountancy firm Menzies LLP , predicts more ‘radical restructuring’ from rival retailers (on top of t he cuts already announced ):
“Consumer shopping habits have transformed during the pandemic. As a result, many bricks and mortar retailers have been forced to take drastic action to rightsize their business models by stripping away superfluous layers of management and back office support services.
Coming on top of 950 job losses announced last month by the retailer, this development is a significant step that may well encourage others to bring forward radical restructuring plans in the next few months.”
Facebook Twitter 10.06am BST 10:06
It’s been a choppy morning’s trading in the City of London.
The FTSE 100 index of blue-chip shares fell initially, but has now recovered its losses to sit unchanged at 6126 points. The French, German, Spanish and Italian markets are all slightly higher, though.
Housebuilder Persimmon is the top riser in London, up 5% after reporting a strong pick-up in demand since the pandemic eased.
But M&S is still struggling after announcing sweeping job cuts , down 4% towards the bottom of the FTSE 250 leaderboard of smaller listed companies. The worst performer is outsourcing group Capita , which have plunged almost 10% after reporting a £28.5 loss due to the pandemic.
Capita warned:
COVID-19 impact has come in a pivotal year for Capita when we expected to see revenue growth.
Profit has been significantly affected and the delay in the return to growth means we will not generate sustainable cash flow for 1-2 years
Facebook Twitter 9.59am BST 09:59
Marks & Spencer’s future prospects depend heavily on the success of its new tie-up with Ocado.
That partnership starts next month, and will let people order M&S food for home delivery through Ocado (supplanting Waitrose).
Stand and deliver: Waitrose and M&S fight for Ocado customers Read more
Russ Mould of stockbrokers AJ Bell says M&S needs the Ocado deal to work, fast:
“The company should thank its lucky stars that it has a successful food arm, as that has helped to prop up trading during a very difficult time. Its clothing and home interests have struggled in the face of serious headwinds as demand fell off a cliff for office dressing and formal wear.
“The next big test for Marks & Spencer will be the imminent launch of its supply deal with Ocado for UK online food orders. A lot is riding on this joint venture being a success and further accelerating growth in Marks & Spencer’s food sales.
“This is the retailer’s chance to play catch-up with the online channel and failure to meet expectations could be disastrous for both management and the company’s already fragile share price.
“Marks & Spencer has been in turnaround mode for a long time and a lot of its effort has been spent trying to fix things rather than come up with new ideas. The Ocado deal is different as it is new territory for the group. Getting this venture off to a strong start could fuel optimism that the retailer is still capable of moving with the times rather than sinking into quicksand.”
Updated at 9.59am BST
Facebook Twitter 9.52am BST 09:52
Photograph: Bon Appetit/Alamy
Speaking of Australia…. the country’s wine industry is facing the threat of new tariffs on sales to the fast-growing Chinese market.
China has begun an anti-dumping probe into imports of Australian wine in a move that will likely worsen tensions between the two countries. It sent shares in Australian winemakers sharply lower today.
The probe was prompted by complaints from the Chinese Alcoholic Drinks Association that Australian wine producers had cut their prices unfairly low, hurting domestic producers. More here:
China opens door to tariffs on Australian wine imports as trade tensions spiral Read more Facebook Twitter 9.22am BST 09:22
In the mining sector, BHP Billiton has pledged to sell its thermal coalmines within two years.
It’s part of the global mining giant’s push for a low-carbon future, following heavy pressure from investors to clean up its business.
From Australia, my colleague Ben Butler reports:
Announcing a full-year profit of US$7.95bn on Tuesday, BHP chief executive Mike Henry also left the door open to supporting a resolution from activist shareholders that would require BHP to stop mining that would destroy Aboriginal cultural heritage sites in Australia until laws are changed to strengthen their protection.
Henry said BHP agreed with the intent of the resolution, which was to prevent “another Juukan Gorge” – a reference to rival miner Rio Tinto’s decision to blow up 46,000-year-old-caves in the Pilbara to get access to higher quality iron ore .
BHP commits to selling its thermal coalmines within two years Read more Facebook Twitter 9.17am BST 09:17
While retailers struggle, housebuilders are hopeful that conditions in their sector are improving.
Persimmon, the UK’s biggest home builder, restored its dividend this morning after reporting that business has picked up strongly this summer.
CEO Dave Jenkinson told the City that weekly sales were nearly 50% higher since the construction sector ended its lockdown, with Persimmon’s order book also swelling.
The Group has had an excellent start to the second half with a c. 49% year on year increase in average weekly private sales rates per site since the start of July and a current forward order book of c. £2.5bn, a 21% increase on last year.
The pandemic has been costly, with Persimmon’s pre-tax profits for the first six months of 2020 down 43%, from £509m to £292m.
Facebook Twitter 9.08am BST 09:08
Shares in Marks & Spencer have fallen by almost 4% in morning trading, down 4.4p to 109.2p.
That suggests investors are underwhelmed by M&S’s latest attempt to transform the business.
M&S’s share have almost halved in value so far this year (the broader market is down almost 20%).
Marks & Spencer’s share price in 2020 Photograph: Refinitiv Facebook Twitter 8.57am BST 08:57
Julie Palmer , partner and restructuring expert at Begbies Traynor , says M&S’s job cuts highlight the ‘huge structural change’ in UK spending habits.
With more people shopping online – retailers need fewer people in the stores, and more people shipping goods to customers’ homes.
“This is a huge transformation for the brand.
And one that is needed because consumers have become used to the convenience of shopping during lockdown. The movement of shop floor jobs to warehouse jobs, stronger emphasis on logistics and a greater wealth of talent that can support the online offering will be where the jobs in retail start to appear. The increase in technology in the workplace to streamline organisations will also become more commonplace as retail moves towards its future structure.
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