M&S plans head office jobs cull as new boss seeks savings

LONDON (Reuters) - British retailer Marks & Spencer plans to cut a net 525 jobs from its London head office, it said on Monday, as new Chief Executive Steve Rowe seeks to simplify the business and reduce costs.

The clothing and food group also plans to reduce the number of roles permanently based in central London by about 400 across its IT and logistics functions.

It said the planned reduction in jobs, which follows a review of M&S's organisational structure, would be achieved through a combination of fewer contractors, natural attrition and redundancies for M&S employees. A formal consultation with affected staff will now begin.

“M&S has to become a simpler and more effective organisation if we are to deliver our plans to recover and grow our business," said Rowe.

"M&S has become too complex and inefficient and today’s proposals aim to address this by removing duplication, driving accountability and establishing clear, consistent processes; which in turn will strip out unnecessary costs."

Shares in M&S, down 29 percent over the last year, were down 0.7 percent at 352 pence at 1138 GMT.

Rowe, a 26-year M&S veteran who succeeded Marc Bolland as chief executive in April, has pledged to turn around M&S's struggling clothing business by improving ranges and availability, cutting prices and offering fewer promotions.

However, his plan, outlined in May, came with a warning of a short-term dent to sales and profit and in July the 132-year-old group reported its worst quarterly clothing sales for a decade.

The proposed reduction in head office roles comprises existing vacancies, about 260 M&S roles and about 200 contractors.

M&S currently employs over 3,500 people working across seven UK head offices.

Its more than 71,000 staff in UK stores and supporting customer functions will not be affected by the proposed changes.

M&S said if the proposals go ahead they would deliver annualised operating cost savings of about 1 percent of the UK cost base.

Its cost growth guidance for the current 2016-17 fiscal year remains unchanged at about 3.5 percent.

However, there would be a one off cost of 15 million pounds ($20 million), which includes the changes to the senior management team Rowe announced in May.

The job cut plans come days after M&S announced a 14.7 percent pay rise for shop floor staff but cut premium pay for Sundays and changed the company's pension scheme.

Rowe said in May M&S's other big strategic issues, including the size of its UK store estate and international plans, would be addressed in the autumn.

($1 = 0.7506 pounds)

(Reporting by James Davey; Editing by Sarah Young and Mark Potter)