Hundreds of workers face cuts as MFI revamps

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MFI Furniture, the kitchens and bedrooms group, is to cut several hundred jobs over the next 18 months in an attempt to improve efficiency. The company plans to close the in-store warehouses at its 186 branches and replace them with 12 larger warehouses which will deliver goods directly to customers' homes.

Up to 1,000 jobs are at risk at the in-store warehouses, though MFI said many staff would be redeployed at the new home delivery centres. Some jobs at the group's head office in Colindale, north London, have already gone and more may be cut.

MFI is making the changes to reduce costs and make its delivery system more efficient. It will sub-let the in-store warehouses space to other retailers.

The new efficiency programme will also see all MFI stores converted to its MFI Homeworks format by mid-1998. These include a broader range of household goods such as kitchenware and textiles. Some 15 per cent of product lines will be stripped out, with ranges such as upholstery and cheaper cabinet furniture under review. Instead, the stores will focus on higher margin kitchens and bedrooms which it manufactures itself.

John Randall, chief executive, said: "The business is going through a process of major change and we aim to improve retail profits and focus on areas of potential growth."

He was speaking as MFI announced an 8 per cent increase in first-half pre-tax profits to pounds 35.4m. The company said it had only experienced a windfall factor boost to sales in the North-east of England, following the flotation of Northern Rock earlier this year. But it said customers were trading up to more expensive kitchens. Its average kitchen sale is now over pounds 2,000, excluding fitting costs.

First-half figures were affected by the pounds 3.5m costs associated with closing its German operations this year and increased losses in France due to the weak economy there. The company said the key to its full year would be the 10 weeks following Christmas.