Yahoo News Primark to cut 400 jobs in UK stores
Primark owner Associated British Foods (ABF.L) plans to cut 400 jobs across its UK stores as the group looks to overhaul its retail management team.
The fashion retailer has launched a consultation with staff as part of plans to make its management structure consistent across its network of 190 stores in the UK.
It said the move aims to “provide clearer accountability, greater flexibility and more management support on the shop floor”.
While it is creating a new management level role as part of the move, it also stripping out other roles and expects the changes to leave it with around 400 fewer retail managers.
Primark currently employs around 29,000 people.
Kari Rodgers, Primark retail director for the UK, said: “The changes we’re proposing will deliver a simplified and more consistent management structure across all of our stores, provide more opportunities for career progression and offer greater flexibility.
“We are now focused on supporting our colleagues who are affected by these proposed changes and will be going through the consultation process.”
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Details of the job cut plans came as ABF reported Primark sales were up 36% year on year at £2.67bn ($3.64bn) in the 16 weeks to 8 January, with operating profit margins ahead of expectations.
Like-for-like sales at Primark’s UK stores were still 10% below two years ago, below the pre-pandemic levels in the final third of 2021 as the rapid spread of the Omicron variant hampered recovery in Europe.
ABF shares were down almost 2% as it warned on continuing supply chain and pricing pressures.
ABF said that cost cuts helped Primark absorb higher costs.
“The effect of inflationary pressure on raw materials and supply chain in this first quarter has been broadly mitigated by a favourable US dollar exchange rate compared to last year and a reduction in store operating costs and overheads,” it said in a trading update.
Primark has about 400 stores across Europe and the United States but does not trade online. Despite facing inflationary pressures, the retailer insists it has no plans to put up prices.
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“A strong boost on last year's heavily restricted sales period is great news for the retailer, but there's a sober tone to these results,” Richard Lim, chief executive of Retail Economics, said.
“Consumers are now well versed in switching online and as case numbers rose, their self-imposed restrictions were accompanied with a shift to alternative brands that could offer what they wanted.
“With no transactional website to lean on, Primark was left frustrated as vital sales were mopped up by their competitors.”
Laura Hoy, equity analyst at Hargreaves Lansdown, said: "Inflationary headwinds are an unavoidable storm cloud hanging over just about everyone right now, but we think ABF is well-placed to ride it out.
"The group's low-cost retail business will appeal to shoppers tightening the purse strings, and improved efficiency across all areas of the business together with price hikes in the grocery business look likely to offset the bulk of the pain for now.
"But if costs continue to balloon, it could become a problem for Primark as the group has very little space to increase costs due to its position as a discount retailer."
Richard Hunter, head of markets at Interactive Investor, commented: “With Primark now off the leash, a strong return to form has boosted overall revenues, with a high possibility of more to come."
