U.K. Retailers Cut Staff After Chancellor Pledged to Save Jobs
(Bloomberg) -- U.K. retailers Boots and John Lewis joined Rolls-Royce Holdings Plc in detailing plans to cut more than 8,000 workers due to the coronavirus pandemic, a day after Chancellor of the Exchequer Rishi Sunak unveiled measures he said would save jobs.
Walgreens Boots Alliance Inc., the owner of the 170-year-old Boots pharmacy chain, said Thursday it plans to eliminate 4,000 positions and trim headcount in its U.K. support office by an additional 20%, citing a “dramatic reduction” in people visiting the company’s stores in the country.
The company will close 48 Boots Opticians stores and said it had furloughed more than 16,000 U.K. employees at the peak of the health crisis, temporarily shutting some outlets and decreasing store hours.
In a second blow to Britain’s main shopping streets, The John Lewis Partnership Plc -- which also owns the upmarket grocer Waitrose -- said it would permanently shut eight stores with the loss of as many as 1,300 jobs.
The closures and staff reductions were the latest to hit a retail industry already badly shaken by the pandemic and offer an indication of the damage wrought on the wider economy. In a bid to stem the blood-letting, Sunak on Wednesday announced an extra 30 billion pounds ($37.5 billion) of tax cuts and spending as part of his plan to spur demand and keep businesses afloat.
Yet joblessness is expected to surge as Sunak starts to unwind the unprecedented government programs that are funding the wages of more than 12 million workers. The plans will begin to be phased out starting next month, before ending for good in October.
Mike Bell, global market strategist at JPMorgan Chase & Co. asset management, said the main risk is unwinding the furlough program before recovery has taken hold, which could result in millions of job losses.
“Removing the furlough scheme before activity has recovered is like building three quarters of a bridge and not finishing it because it is becoming expensive,” he said.
In addition to the retail sector, the effects on employment are reverberating across aviation and transport companies due to the grounding of planes and restrictions on travel.
Rolls-Royce started the process of making 9,000 global job cuts, including 3,000 in the U.K., Chief Executive Officer Warren East said on a conference call Thursday.
The company has opened voluntary severance to staff in the country and has had expressions of interest from more than that number, with about 2,000 of those positions expected to go by August, he said.
Adding to the cuts is planemaker Airbus SE, which has announced 1,700 U.K. job losses. British Airways, EasyJet Plc, Ryanair Holdings Plc and Virgin Atlantic Airways Ltd. are also downsizing, as are Heathrow and Luton airports. Courier DHL International GmBH plans to lay off as many as 2,200 U.K. workers based at Jaguar Land Rover factories.
The car industry has been hit hard by a slowdown that was taking shape even before the health crisis kept consumers at home and showrooms shut. Aston Martin Lagonda Global Holdings Plc, Manchester-based vehicle-distributor Lookers Plc and supercar maker McLaren Group Ltd. have all announced layoffs in recent weeks. London-based manufacturer Johnson Matthey Plc is cutting 2,500 positions, although it’s not clear how many in its home market.
While the U.K. retail sector is showing signs of serious weakness after lockdown measures were lifted, the pain began before the pandemic hit. Last week, Harrods Department Store Co. announced hundreds of job cuts and a host of others, including Monsoon Accessorize Ltd., have carried out insolvency processes to shut stores and reduce debts. Sandwich chain Pret a Manger Ltd. said this week it will cut at least 1,000 jobs as it permanently closes 30 U.K. stores.
Most stores reopened in mid-June, although fewer customer visits and lower demand are eating away at profits. Many retailers also face large rent bills and tax payments that have built up during lockdown, as well as higher costs of running stores safely.
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