MFI to axe 1,500 jobs

Click to follow

The furniture group MFI today revealed plans to cut almost 1,500 jobs as part of a restructuring drive aimed at reviving its ailing fortunes.

The group said it will reduce UK manufacturing by 40 per cent and close at least 11 stores, as well as shut three home delivery centres and its sofa workshop business.

The move follows new MFI chief executive Matthew Ingle's long-awaited review of the firm as he tries to haul the furniture retailer out of the red.

MFI also said it made underlying losses of £600,000 in 2005, against £54.5 million profits the year before.

Around 1,100 jobs - nine per cent of MFI's workforce - could go from its manufacturing sites as it sources more products from elsewhere.

The firm, which currently makes half of its stock in-house, said the move meant higher quality furniture could be made at lower cost and risk. Annual savings would be around £12 million, MFI said.

It also announced it would withdraw from selling home furniture to focus on its core kitchens and bathrooms products which make up 80% of sales but are not given such a high proportion of selling space in its shops.

The company will also reduce the number of kitchen and bedroom ranges to concentrate on higher quality, more profitable products.

MFI has begun assessing which shops would best fit the new upmarket strategy - with 11 stores already identified for closure that could lead to around 95 job losses.

The pull-out from home furniture means it has begun plans to sell the Sofa Workshop arm - where another 95 jobs could go.

A further 180 jobs are under threat with the proposed closure of three of the firm's eight regional home delivery centres.

MFI blamed the move on high fixed costs of distribution and delivery - with around 60% of kitchen orders often requiring more than one delivery to complete.

Mr Ingle has enjoyed some success during his first four months in charge, with the company settling a VAT dispute with HM Revenue & Customs and earlier this month selling its French kitchen business, Hygena Cuisines, for much more than expected at £92 million.

He said: "We have a huge opportunity to rebuild this group - there is a lot to do and it will take time.

"We are building the foundations needed and I am confident we are on the right track."

* The telecoms group Cable & Wireless dealt a fresh blow to staff today by warning it could halve its UK workforce over the next five years.

The group, which acquired Energis last year, said it envisaged its current headcount of 5,500 would fall to between 2,500 and 3,500 over the next four to five years. It added that 350 jobs would be lost in the current financial year.

Cable said the changes reflected plans to concentrate on fewer and larger corporate customers, while reducing the complexity in its products and systems.

The group employs around 2,000 staff in Bracknell, with other workers in Leeds, Manchester, Reading and London.