Competition forces Tesco to axe 800

TESCO, the supermarket group, yesterday underlined the pressures facing food retailers when it said that it was to cut 800 jobs from its head office and distribution centres over the next six months, writes Heather Connon.

The job reductions follow Friday's warning from Sainsbury that a review could lead to job losses among its 3,000 head-office staff.

The cuts at Tesco represent about 10 per cent of its head office and distribution staff. A spokeswoman said they would be in 'all departments, at all levels'. However, the group said plans to open between 25 and 30 stores would create 5,000 jobs in the next year. Greater competition has also prompted it to cut back expansion and depreciate the cost of its superstores.

On Friday, Sainsbury announced similar plans for depreciation although it is maintaining its expansion programme. It revealed that sales, excluding new store openings, had fallen by 1 per cent in the 16 weeks to mid-January.

Tesco's shares closed 1p lower at 221.5p while Sainsbury, which shed 48p on Friday, fell 9p to 384p.