W H Smith has announced plans for a major restructure which could see around 1,500 roles made redundant across the business.
In a trading update, the retailer said reduced passenger numbers and lower footfall in towns and cities meant it was reviewing its store operation across its Travel and High Street business.
It has now launched a collective consultation on a proposed restructure which could lead to up to 1,500 roles becoming redundant. “This has been a very difficult decision and we are committed to supporting all our colleagues throughout this process and ensuring it is conducted fairly,” the firm said. The costs associated with the restructure will be in the region of £15m to £19m, the company said.
The group said it expected to deliver a headline loss before tax for the financial year ending 31st August of between £70m and £75m.
The retailer said total group revenue was down 57% in July compared to the same time last year, with the High Street declining 25% and falling 73% in Travel. A previous trading update in April warned group revenues would be down 80%-85% from April until August. Figures showed the numbers were actually down 83% in April, 82% in May and 69% for June.
W H Smith group chief executive Carl Cowling said: “Covid-19 continues to have a significant impact on the W H Smith Group. Throughout the pandemic, we have responded quickly and taken decisive actions to protect the business including substantially strengthening our financial position. We have also welcomed support from government where available.
“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. I regret that this will have an impact on a significant number of colleagues whose roles will be affected by these necessary actions, and we will do everything we can to support them at this challenging time.
“While we are mindful of the continuing uncertainties that exist, we are a resilient and versatile business. The operational actions we are taking along with the financing arrangements that are in place, put us in a strong position to navigate this time of uncertainty and we are well positioned to benefit in due course from the recovery of our key markets.”
Last month, it was revealed 150 members of staff at W H Smith's head offices in London and Swindon had already entered redundancy consultations
The trading update said the company had seen gradually improved sales since lockdown started to ease worldwide but the recovery wass slow. In the US, the firms anticipates a faster recovery than elsewhere, although overall revenue is down 80%.
In travel, there has been a phased reopening of stores at UK railways and airports, with 53% of the total estate back open. For the high street, 203 stores that host Post Offices remained open through the pandemic and 575 are now open across the estate.
The update said W H Smith had also secured eligibility for the Government’s Covid Corporate Financing Facility (CCFF). It has also amended the short term £120m facility it agreed during a refinancing in April meaning it no longer had to be cancelled if the CCFF is accessed.
The update said: “Taking into account the group’s current financing arrangements, combined with a variety of operational actions, the board is confident that the group has sufficient funds to allow it to operate throughout a prolonged downturn in our markets.”
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