Marks & Spencer Group Plc Warehouse Closures To Claim Around 700 Jobs

  • Feb 17, 2020 GMT
  • Team Kalkine
Marks & Spencer Group Plc Warehouse Closures To Claim Around 700 Jobs

Marks and Spencer Group Plc (LON: MKS) is going to shut its two clothing distribution centres which have created a threat to nearly 700 jobs in the company. The struggling retailer, Marks and Spencer Group Plc is overhauling its warehouse network to improve stock availability and save money, which is a big challenge for its high street stores.

Marks and Spencer Group Plc announced that Thorncliffe in Sheffield and Long Eaton in Derbyshire sites would be shut down in the year 2021. Thorncliffe is operated by rival operator XPO, and Long Eaton is managed by the logistics firm DHL. The entire staff of these two sites are six hundred sixty-two in numbers. 

An area coordinator at the shopworkers’ union Us daw, Ed Leach stated that the decision is a big disappointment to the staff of Marks and Spencer Group Plc. “Us daw will now participate in a thorough consultation where the union will go through the business case and will look for the best possible option for all affected staffs.”

Marks and Spencer Group Plc has been putting effort to restructure itself from almost last twenty years but could garner very little success. Steve Rowe, chief executive and Archie Norman, chairman have however assured that it will be different at this point of time.

As per the media report, the company which has recently missed its significant place in FTSE 100 index, is trying to revamp its food and fashion segments to expand its influence and attract young customers.  Earlier, in the year 2019, the company had informed the shareholders that its logistics network was holding it back because it was “high expense and complicated” and was very listless at refilling stores.

Regarding, the company’s warehouse closures, it has previously already closed four warehouses which include Neasden in west London and Hardwick, near Warrington. It signifies that from the year 2021, Marks & spencer group plc fashion business will run out of six depots which have been serving the whole United Kingdom.  The company stated that it is in the initial situation of revising supply chain to focus on the flow of availability and product for consumers. The company will no longer be serving stores from Long Eaton distribution and Thorncliffe a centres”.

The company further stated that “shifting the operations is not the final course of action, but they have taken a gradual but significant move to support best services to the customers as they shift to a nationwide linked network.

MKS – Overview of Marks and Spencer Group PLC

Marks and Spencer Group Plc (LON: MKS is a prominent United Kingdom retailer company which brings quality, great value clothing, food and homeware to millions of consumers across the world. The company’s food is well-known for its freshness, quality and innovation credentials. The company has over fourteen hundred stores around the fifty-seven countries and more than fifty global websites. The company delivers a variety of financial services which consists of current accounts & savings, credit cards, insurance and mortgages. The United Kingdom segment includes the United Kingdom franchise businesses and the United Kingdom retail business. The global sector includes of Marks & Spencer’s held businesses in the Asia, Europe and the Republic of Ireland jointly with global franchise businesses.

MKS – News Updates

On 11th February 2020, the company announced that Eoin Tonge would be joining the company’s Board as CFO (Chief Financial Officer). As per the company information, “Eoin Tonge had worked with Goldman Sachs from the year 1994 to 2006. After Goldman Sachs, he was the Managing Director of the Grocery Business for the year 2007 to 2009 and then worked as the Chief Strategy Officer from the year 2009 to 2014. Currently, Eoin Tonge is working at Greencore Group Plc as a chief financial officer, a position he held since 2016.

On 3rd February 2020, the company announced that its capital consists of 1,950.0 million shares with equal voting rights. The company has zero shares in treasury stocks.

MKS - Trading Updates

On 09th January 2020, the company announced third-quarter 2019/2020 trading statement for thirteen weeks to 28th December 2019.

The total revenue of the United Kingdom stood at £2,767 million in the third quarter of the financial year 2019/2020 and increased by 0.2 per cent on a like for like basis. The food revenue stood at £1,704 million in the third quarter for the financial year 2019/2020 and increased by 1.4 per cent on like for like basis.

The international revenue stood at £251 million. The Clothing & Home UK online revenue increased by 1.5 per cent, which was less than anticipated. Revenue was negatively impacted by competitor discounting in December 2019 and fewer furniture dispatches at the start of the third quarter.

Improving value and decrease in options has supported to decrease the amount of stock into a sale by 12 per cent.

MKS - Stock Price Performance

On 17th February 2020, at around 09:10 AM (GMT), by the time of writing this report, the stock of Marks and Spencer Group Plc traded at a price of GBX 186.35 per share on the London Stock Exchange, an increase in the value of around 1.36 per cent or GBX 2.50 per share, as opposed to the closing price of the stock on the previous trading day, which has been reported to be at GBX 183.85 per share.

At the time of writing, the market capitalisation of Marks and Spencer Group Plc was £3.59 billion with regards to the current market price of the stock. The free float and outstanding shares of Marks and Spencer Group Plc were reported at 1.94 billion and 1.95 billion, respectively.

The share price of Marks and Spencer Group Plc recorded at GBX 292.86 as on 26th February 2019 was its 1-year peak price, whereas the share price recorded at GBX 161.35 as on 10th October 2019 was the 1-year low share price. The current share price was lower by 36.36 per cent from the 1-year high price, whereas the current share price was higher by 15.49 per cent from the 1-year low price.

The beta of the stock has been reported at a value of 1.18, representing the fact that the movement of the share price of the company has high volatility as compared with the movement in the comparative benchmark index.

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