WH Smith is to make 1,500 workers redundant in further grim news for the UK retail sector as it struggles with the effects of the coronavirus pandemic.
The group, whose products range from sandwiches to books, newspapers and stationery, has been particularly hard hit because of its previously strong business at transport hubs, which have suffered because passengers have stayed away amid lockdowns and travel restrictions. High street footfall has also taken a hit.
The bulk of the job losses – about 15% of the company’s 14,000-strong global workforce – are expected to be in travel shops after a hoped-for recovery in sales did not materialise.
Revenues from WH Smith’s travel shops fell by 92% year on year at the peak of the UK’s lockdown in April and were still down by 73% in July even after restrictions eased. Across the group, revenues were still down by 57% in July compared with 2019.
The start of consultations with workers on the cuts comes as the government’s coronavirus job retention scheme, which has supported furloughed workers’ wages, begins to taper. On Saturday, employers using the scheme were required to start contributing to wages and the entire scheme is scheduled to end in October.
The imminent end of the furlough scheme has raised fears of rapidly accelerating unemployment across the UK.
The high street is under particular pressure as it also struggles with shoppers’ rapid move online – a trend further encouraged by lockdown stay-at-home orders. In this week alone the travel agent Hays and the retailer DW Sports announced major job losses on Monday, followed by Pizza Express and the electronics retailer Dixons Carphone on Tuesday.
WH Smith has been gradually reopening stores, with just over half of travel shops trading and all 575 high street stores open.
WH Smith expects to report a headline loss before tax for the financial year ending 31 August 2020 of between £70m and £75m.
Carl Cowling, the chief executive, said: “Covid-19 continues to have a significant impact on the WH Smith Group.
“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.”