Elland firm Marshalls could axe up to 400 jobs as sales tumble

The Elland-based firm is in consultation with employees to reduce staff numbers by up to 15 per cent after a 27 per cent fall in sales in the first four months of 2020.

The firm said it is reopening plants as demand returns. It said its facilities have low re-start time and cost requirements.

“This flexibility and our improved efficiency means that capacity will not be materially reduced by the proposed changes and we will continue to satisfy our customers’ requirements,” the firm told shareholders at its AGM.

As part of these actions, the board and executive management have agreed to a 20 per cent reduction in remuneration. Senior managers in the business have now also agreed a 15 per cent reduction in their remuneration.

Additionally, Marshalls is using the Government’s scheme which allows the deferral of tax payments that would normally have been payable in the period to June 30.

It also continues to use the furlough arrangements that are in place.

As a result of the impact of the Covid-19 crisis, Marshalls’ sales in the first four months to April 30 fell from £180m to £131m. Sales activity steeply fell in the last week of March and throughout April.

However, the firm said that in the early part of May it has seen daily levels of activity progressively improve and it is currently at 50 per cent of its daily revenues compared with the same period in 2019.

The group said it is closely monitoring cash flows to ensure that the business is in a strong position for eventual recovery.

“Our priority is to ensure the health and safety of our employees, and consequently detailed additional safety standards and procedures have been put in place, which are in line with current Government Covid-19 guidance, to allow our sites to operate safely,” the firm told investors.

“We will meet the demands of our stakeholders and protect the long-term sustainability of the business.”

It added that the combined effect of the cost reductions, the restructuring programme and new bank facilities will leave the group stronger and well placed to meet the current challenges and future opportunities.

The firm said it is not possible to provide an accurate assessment of trading for the current year and accordingly all previous market guidance has been withdrawn.

The group has now signed final agreements with NatWest, Lloyds and HSBC for an additional £30m, 12-month committed revolving credit facility with each bank.

Marshalls said these additional facilities will significantly strengthen the group’s headroom rapid payback’ from the cuts

Analyst Clyde Lewis at Peel Hunt said: “The group has indicated revenue was down 27 per cent for the first four months of the year with April very weak.

“May has bounced and is running at 50 per cent of last year and improving. The group has taken the opportunity to review its costs and operations and has announced plans to take about 15 per cent out of the workforce with limited impact on capacity. We expect a rapid payback from these cuts.

“We continue to see Marshalls as a clear leader in its field and worthy of a superior rating on an ongoing basis.”