Surf-style fashion brand White Stuff is to make “significant” redundancies to prepare the company for a reduction in demand and opening hours as a result of the coronavirus outbreak, Sky News has learned.
The retailer, which employs more than 1,500 people in 120 shops, told sales and head office staff it was opening consultation on potential job cuts on Wednesday.
White Stuff declined to say how many jobs would be lost but said the cuts would be significant, and were a direct consequence of the COVID-19 pandemic.
The company believes the outbreak will have a fundamental impact on trading conditions when lockdown restrictions are eased, and says it is acting to cut jobs now to try and ensure that all its shops remain open.
Insiders said it was clear that social distancing restrictions would remain in place for the foreseeable future.
As a result it is likely stores would be open for shorter hours, have less customers and require fewer staff to keep them open.
The company believes the outbreak has accelerated existing trends in retail away from bricks-and-mortar shops towards online shopping, and says it hopes to reopen all of its stores when lockdown lifts.
Chief executive Jo Jenkins said: “For the last eighteen months we have been on a journey to transform our business into a more digitally driven brand.
“What we were planning on doing to reshape the business, we now need to do more quickly.
“We need to face into the reality, particularly given the on-going uncertainty of when and how shops might open given social distancing, that we need a leaner, more agile operating model that allows us to react to changing customer behaviour.”
White Stuff’s position is informed by its experience of operating in Germany, where its stores have reopened after Angela Merkel’s government began easing restrictions.
Its action comes as concerns grow over the sustainability of the government’s employee support scheme, under which more than six million people have been furloughed with up to 80% of their wages paid by the state at a cost of around £8bn so far.
The scheme is due to expire in June and the Treasury is considering how to phase out the scheme, with concern among business groups that millions could be left unemployed if support is withdrawn before restrictions have eased and consumer confidence returned.
Government sources suggested this week that companies and staff are becoming “addicted” to the furlough scheme, despite it having paid just a single month’s wages for businesses ordered to close by the state.
Asked at Prime Minister’s questions when the scheme might end Boris Johnson told Parliament he wanted workers to “earn their pay packet” when they can safely and securely return.
White Stuff, which has placed some staff on the furlough scheme, said the scheme’s current end date of June 30 meant it was not sustainable as an alternative to redundancies.
The company is among the first directly to link staff cuts to the impact of the outbreak on future trading.
There are fears many more retailers will face similar decisions in the coming weeks and months.
Some have predicted the furlough scheme could become a “waiting room” for redundancies if the economy does not bounce back sufficiently.
Paul Johnson, head of the Institute for Fiscal Studies, warned: “‘If you remove it quickly you risk a wave of unnecessary redundancies.
“If you are too generous then you risk a longer, deeper recession and a bigger hit to the public finances.”
The Prime Minister will outline on Sunday how current restrictions will be eased over time, with a phased return of shops currently considered non-essential likely to feature in the medium-term.
White Stuff, which was founded in the 1980s by university friends George Treves and Sean Thomas, recorded a loss of £1.3m on turnover of £142m last year, and employs more than 1,900 people overall – including 1,500 in shops.
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