LONDON: Tesco Plc plans to cut 4,500 jobs as the supermarket operator slims down hundreds of stores and adds to the mounting toll on employment in UK shopping districts.
Britain’s biggest retailer said it will streamline operations at its 153 medium-size Metro stores in city centres while reducing opening hours at 134 Express convenience stores.
The moves announced Monday come on top of previous cuts at Tesco’s larger supermarkets, including closing fresh-food counters. Those changes were expected to affect as many as 9,000 of the company’s more than 300,000 workers.
The new round of cuts comes as price competition among UK supermarkets intensifies, with discounters Lidl and Aldi gaining market share, and the threat of a disorderly Brexit hitting the value of the pound and raising the cost of imported food.
“Given investors’ focus on margins in a market characterized by its competitiveness, we view these measures as a positive to help streamline the group cost base,” Morgan Stanley analyst Maria-Laura Adurno said in a note.
Tesco shares traded 1.1% lower in London on Monday afternoon.
While the UK’s labour market remains tight, the Tesco cuts will add to the job losses in the retail industry as consumers increasingly shop online. Employment in the sector fell 2.3% in the second quarter from a year earlier, costing 72,000 jobs, according to the British Retail Consortium.
The company said it’s making the changes at Metro stores because many customers are using them as convenience stores for everyday shopping, rather than making larger weekly purchases.
That necessitates more flexible working and quicker ways of filling shelves, Tesco said in a statement, with fewer products stored in back rooms and more groceries going straight to the shop floor.
Stock routines will also be simplified at Express stores, where hours will be reduced slightly during less busy periods, the company said.
Tesco Chief Executive Officer Dave Lewis has pared costs aggressively since taking over in 2014. In June, Tesco’s credit rating was raised to investment grade by Moody’s Investors Service, which cited profitability gains and debt reduction.