Missguided mulls staff cuts as sales growth slows
Missguided is rarely out of the news these days whether it’s the e-tailer’s move into physical stores, its inclusivity-focused marketing campaigns and mannequins, or its strong sales figures.
But the latest headlines are somewhat less positive with reports that it is to cut over 6% of its staff in a major redundancy programme.
Founder Nitin Passi is believed to be mulling a cut of 50 jobs out of the total 800 people Missguided employs in a reaction to slowing sales growth, a tough UK retail market, and over-enthusiastic expansion in staff numbers.
It’s a significant development for the wider industry as well as for those who will be affected. The new breed of e-tailer and retailer, including Asos, Boohoo and Quiz, are more used to reporting on expansion plans than contractions, with cuts of this magnitude quite rare.
But it’s perhaps less of a surprise than it might seem. While just a few months ago Missguided reported a sales surge of 75% to £205.8 million in its latest year (to March 2017), it also said it had swung to a pre-tax loss of £1.6 million after a small profit of £0.38 million a year earlier.
The company still has huge potential and a 100% e-sales rise in the US, France and Germany, plus the fact that international sales are heading towards half of its total turnover, underline the opportunities that lie ahead.
But heavy investment and a tough retail market mean profits are proving elusive.
Thisismoney reported that the redundancy programme has now been launched with the company “kicking off a process of proposals to make our organisation leaner.”
It also quoted documents circulated to senior staff in which Passi said: “The tough market has led to sales growth that’s lower than we need it to be and our investments in margin and other costs means that missing our annual profit target is inevitable.”
Around 100 job roles are being reviewed even though the axe is expected to fall on just 50. That would most likely also mean changes to the other 50 jobs as the work of the redundant staff is absorbed into their roles.
The cuts will fall in the firm’s offices in Manchester, London and Leicester and come after the company doubled staff numbers in just two years, with management saying that “some teams are less lean then they need to be” as a result.
But Passi also said that this isn’t a sign of weakness with the company expecting to report another 12 months of double-digit sales growth for the period that ends next month.
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