WH Smith and M&Co to cut 1,900 jobs as Covid-19 hits sales
WH Smith’s travel shops struggle, while clothing retailer will shut 47 stores
WH Smith and the clothing chain M&Co are to make 1,900 workers redundant in further grim news for the UK retail sector as it struggles with the effects of the coronavirus pandemic.
WH Smith, whose products range from sandwiches to books, newspapers and stationery, will cut 1,500 jobs.
M&Co, the Renfrewshire-based fashion retailer previously known as Mackays, will close 47 shops as part of a pre-pack administration, leaving 215 open. The closures will cost just under 400 jobs, out of a total workforce of about 2,600.
The latest job cuts mark another day of thousands of job losses for the UK high street. In this week alone the travel agent Hays and the retailer DW Sports announced major job losses on Monday, followed by Pizza Express and the electronics retailer Dixons Carphone on Tuesday.
The high street is under particular pressure as it also struggles with shoppers’ rapid move online – a trend further encouraged by lockdown stay-at-home orders.
However, the recent wave of job cuts comes as the government’s coronavirus job retention scheme begins to taper. On Saturday, employers using the scheme, which has supported furloughed workers’ pay, were required to start contributing to wages as the scheme starts to wind down. It ends entirely in October, which has raised fears of rapidly accelerating unemployment across the UK.
The bulk of the WH Smith job losses – about 15% of the company’s 14,000-strong global workforce – are expected to be in shops in locations such as rail stations and airports, after a hoped-for recovery in sales did not materialise.
Revenues from WH Smith’s travel shops fell by 92% year on year at the peak of the UK’s lockdown in April and were still down by three-quarters in July even after restrictions eased. Across the group, revenues were still down by 57% in July compared with 2019.
WH Smith expects its travel businesses to continue to struggle, with the air industry not expecting a return to 2019 passenger numbers for years and companies across the UK still working from home. There have been broadly similar trends in its 153 stores outside the UK, the company said.
WH Smith has been gradually reopening stores, with just over half of its 580 travel shops trading and all 575 high street stores open.
WH Smith has not so far announced major store closures, unlike many other retailers, but it is understood that some 14 smaller, kiosk-style stores in bus and railway stations will close as part of the restructuring announced on Wednesday. The number of managers will also be cut, with those remaining put in charge of multiple stores each.
WH Smith expects to report a headline loss before tax for the financial year ending 31 August 2020 of between £70m and £75m.
Carl Cowling, the chief executive, said: “Covid-19 continues to have a significant impact on the WH Smith Group.
“In our travel business, while we are beginning to see early signs of recovery in some of our markets, the speed of recovery continues to be slow. At the same time, while there has been some progress in our high street business, it does continue to be adversely affected by low levels of footfall. As a result, we now need to take further action to reduce costs across our businesses.”
M&Co, owned by the McGeoch family, had also suffered a slump in sales because of the pandemic, despite also having a website. Sky News reported that it suffered a £50m revenue shortfall.
Under the pre-pack administration, administrators sold the high street retail operation to another company owned by the McGeoch family. Andy McGeogh will continue to be chief executive.