Marks & Spencer Group Plc, Britain’s largest clothing retailer, reported the steepest sales decline in about nine years and plans to cut about 1,230 jobs by closing stores and eliminating positions at its head office.
Revenue at outlets open at least a year fell 7.1 percent in the fiscal third quarter, the London-based company said in a statement yesterday. That beat the 8.3 percent median estimate of five analysts surveyed by Bloomberg News. The job cuts represent about 1.6 percent of Marks’ 75,000 workforce and will help cut costs by as much as £200 million (US$298 million) in fiscal 2010.
“Challenging economic conditions” are expected to continue for at least the next 12 months, chief executive officer Stuart Rose said in the statement.
Britons made fewer Christmas shopping trips as unemployment rose and consumers made more purchases on the Internet.
Marks began offering discounts more than a month before the holiday, leading it to forecast a 1.75 percentage point decline in full-year gross margins.
The retailer plans to close 27 stores, including 25 of its Simply Food outlets, leading to the loss of about 780 jobs.
Marks also said it would cut as many as 450 jobs at its head office and would make changes to its final salary pension plan by capping workers’ annual increases in pensionable pay.
Same-store sales of clothing and home products fell 8.9 percent in the quarter, while food sales dropped 5.2 percent on that basis. Analysts expected sales to fall 7.8 percent and 6.3 percent, respectively, the median of six estimates showed.
Marks’ closest rival, Next Plc, on Tuesday maintained its full-year profit forecast after resisting price cuts before the holiday and said five-month sales slid 7 percent on a comparable store basis.