Mothercare plans to axe up to 140 shop managers

Exit Sign

Mothercareplans to cut up to 140 shopfloor managers as part of an overhaul of the loss-making UK chain.

The company said 620 middle managers had been put at risk of redundancy, with 120-140 jobs expected to go as new roles are created. Mothercare employs about 5,000 people in its UK shops.

The move would save £1.3m and help reduce Mothercare’s payroll costs to 12% of sales, which compares with other chains who aim to operate below 10%, the baby goods retailer said.

The company said: “Mothercare is proposing the creation of new roles and a new structure for its management in stores ... This step will lead to an adjustment in working practices for a number of our UK store management colleagues and we are consulting with those affected.”

The changes are being overseen by the new chief executive, Mark Newton-Jones. Since taking the reins at Mothercare a year ago, Newton-Jones fought off a £266m takeover bid from US rival Destination Maternity and has embarked on a mission to modernise the high street chain, which he described as old-fashioned and in need of a complete overhaul.

A trading update on Thursday showed UK like-for-like sales climbed 5.1% in the fourth quarter – the fourth consecutive quarter of like-for-like sales growth – after Newton-Jones decided to run fewer promotions and discounts. International sales were even stronger, rising 11.4% in constant currencies. However, currency movements reduced the actual growth figure to 5.5%.

Newton-Jones said it is “still early days in our turnaround” but hailed the progress made so far.

“The final quarter is in line with our plan. In the UK, our strategy of reducing promotional and discount activity and returning to being a full price retailer has continued to stabilise margin. By restricting discount periods we produced a stronger end-of-season sale with improved sell through rates as a result. Like-for-like and online sales have also benefited from this approach, along with the initiatives to improve product and service put in place during the year.”

His turnaround plan also involves moves to improve customer service, introducing more upmarket product ranges and thrashing out better deals with suppliers.

Powered by Guardian.co.ukThis article was written by Julia Kollewe, for theguardian.com on Thursday 16th April 2015 14.47 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010

 

JefferiesAnd the Best Place to Work in the global financial markets 2017 is...

Register for Financial Markets News Alerts