UK Retailers Boots, John Lewis To Cut More Than 5,000 Jobs As Pandemic Decimates Sales

Prominent British retailers John Lewis and Boots plan to cut up to 5,300 jobs due to the negative impact of the covid-19 pandemic and related lockdown.

Boots, which operates more than 2,500 health and beauty shops across the U.K., will shed 4,000 jobs, while John Lewis, which runs high-end department stores, will shutter eight stores, placing 1,300 jobs at risk.

Boots also said it will restructure its head office and close 48 ‘Boots Opticians’ stores.

Retail sales at Boots dropped by 48% over the past three months during the pandemic, while its optician business saw sales plunge by 72%.

“The proposals announced today are decisive actions to accelerate our transformation plan, allow Boots to continue its vital role as part of the U.K. health system, and ensure profitable long-term growth,” said Sebastian James, managing director of Boots UK. “I am so very grateful to all our colleagues for their dedication during the last few challenging months… We recognize that today’s proposals will be very difficult for the remarkable people who make up the heart of our business, and we will do everything in our power to provide the fullest support during this time.”

John Lewis said it needed to "secure the business' long-term future and respond to customers' shopping needs.” The company plans to close stores in Birmingham, Watford, Croydon, Newbury, Swindon, Tamworth, as well as sites at Heathrow airport and London St Pancras railway station.

John Lewis said these eight stores were already "financially challenged" even before the pandemic emerged. In March, the company warned that falling profits would lead to store closures.

Profits at John Lewis plunged 23% last year to £123 million ($156 million) -- the third consecutive year of sinking profits -- as more consumers opted to buy online or patronized other stores.

This year, staff bonuses at John Lewis were set at 2%, the lowest figure since 1953 when no bonuses were paid.

John Lewis estimated that between 60% and 70% of its sales will be generated online this year and next – up from 40% before the pandemic.

"Closing a shop is always incredibly difficult and today's announcement will come as very sad news to customers and partners,” said Sharon White, chairwoman of John Lewis Partnership. "However, we believe closures are necessary to help us secure the sustainability of the partnership - and continue to meet the needs of our customers, however and wherever they want to shop. Redundancies are always an absolute last resort and we will do everything we can to keep as many [staff] as possible within our business."

A wave of job cuts by many U.K. companies come amid worries that the government’s economic support plans might not be sufficient to prevent higher unemployment.

On Wednesday, the Chancellor of the Exchequer Rishi Sunak unveiled new measures, including a one-time payment of £1,000 ($1,270) to employers for each furloughed worker they retain through the end of January 2021.

But unions warned that job losses will still "gather pace" while economists forecast "a rapid rise in unemployment.”

Sunak himself predicted more job losses.

"Is unemployment going to rise, are people going to lose their jobs?' Yes, and the scale of this is significant,” he told BBC. "We are entering one of the most severe recessions this country has ever seen. That is of course going to have a significant impact on unemployment and on job losses."