MFI quashes rumours of plan to axe 1,000 jobs

MFI, the kitchens and furniture retailer, played down speculation yesterday that it was considering a shake-up of its warehousing and distribution systems that could lead to the loss of up to 1,000 jobs.

The company has been testing a system of "superwarehouses" under which warehouse space in individual stores is reduced, freeing up more space for retail display. Some City analysts say the company is planning to close many of the warehouses attached to its 180 stores and open a national network of 14 "super-distribution" centres instead.

The company declined to comment yesterday, saying its policy was not to comment on market rumour. MFI is in a closed period ahead of its annual meeting statement on 25 September when it will report current sales figures. The company also declined to comment on speculation that its national distribution centre in Northampton is under threat.

However, it is thought that even the closure of all the in-store warehouse space would not see a huge number of staff lose their jobs. Of MFI's 9,294 employees, 2,595 are employed in manufacturing, 6,086 in retailing and less than 800 in central services, which includes warehousing.

MFI has been gradually re-configuring its store portfolio to focus more on the Homeworks format which includes a broader range of homeware products such as furnishings, textiles and tableware. The stores need smaller warehouses and MFI has either been closing the additional space or letting it out to other retailers.

Analysts believe John Randall, MFI's chief executive, is keen to make MFI a more efficient company. The speculation over its distribution systems comes just weeks after the departure of two directors and the announcement that the retail experiment in Germany is to be abandoned after two and half years.

David Brock, the international director who had been with MFI for more than 20 years, left the company with compensation of pounds 150,000.

Trevor Tellett, the managing director of MFI furniture centres left earlier the same month. He will remain as a consultant for a year and will still be paid his annual salary of pounds 160,000.

At the beginning of July MFI reported that pre-election jitters had left the year's sales and profits disappointingly short of expectations. Mr Randall reported that sales were 5 per cent higher in the first nine weeks of the year against growth of 7 per cent in March.