Tesco to axe 1,200 head office jobs in 'next step' of turnaround

The supermarket giant informed affected staff this morning about the latest wave of cuts.

The cull represents around 25% of the workforce employed at Tesco’s offices in Welwyn Garden City and Hatfield.

Retail Week understands the axe will fall across most areas of its centralised functions.

The grocer is grappling with the rapidly changing retail landscape and cost headwinds including living wage growth, the apprenticeship levy, business rate changes and rising sourcing costs amid the slump in the value of the pound.

Turnaround efforts

Tesco said the changes represented the “significant next step” in its ongoing turnaround efforts under boss Dave Lewis, who has shored up the grocer’s balance sheet and nursed it back to sales growth.

It comes less than a week after Britain’s biggest retailer said it was closing its call centre in Cardiff, with the loss of around 1,100 roles.

But last Friday, Tesco revealed it was giving its store staff a 10.5% pay rise over the next two years, taking pay from £7.62 per hour up to £8.42 by November 2018.

New service model

A Tesco spokeswoman said: “Today we have shared with colleagues across Tesco changes that we plan to make to the way we operate our business. This is a significant next step to continue the turnaround of the business.

“This new service model will simplify the way we organise ourselves, reduce duplication and cost but also, very importantly, allow us to invest in serving shoppers better.

“We have made good progress so far in our turnaround but we have more to do. We will work with colleagues to support them as we go through this important transition.”

Transformation plan results

Back in April, Tesco reported a 29.9% rise in full-year operating profit to £1.28bn as Lewis’s transformation plan continued to bear fruit.

Full-year like-for-like sales rose in its core UK arm for the first time since 2009/10. 

And group like-for-likes climbed again in the first quarter of its current financial year, marking Tesco’s sixth consecutive period of growth under Lewis.

Tesco is firmly back on the front foot under the former Unilever executive and is targeting a return to group margins of between 3.5% and 4%.

It is also in the process of acquiring wholesale giant Booker as it bids to tap into the rapidly growing foodservice market and grow its convenience portfolio.

The £3.7bn merger is currently being investigated by the Competition and Markets Authority.