BUSINESS LIVE: M&S profits soar 75%; Reach to cut 450 jobs; ITV suffers weaker studios demand

PwC will cut around 600 jobs in the UK as staff have been reluctant to leave on their own, according to a report.

The accounting giant confirmed that it planned to make ‘voluntary severance offers’ to some of its staff as attrition numbers were lower than usual.

PwC did not mention any job numbers, but the Financial Times reported that it is targeting around 500-600 cuts.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown:

‘Good progress in Clothing and Home, where Marks & Spencer has struggled in recent years, has to be commended. It shows the extent to which the company has regained its style credentials and it is particularly admirable given the pressure on sales of discretionary items amid the cost-of-living crisis.

‘The M&S brand focuses on quality and value, and has succeeded in drawing shoppers in. But exiting the first half, unusually warm weather across September and October has naturally left investors apprehensive about the sales of winter clothing. They’ve weakened from their first-quarter highs but there’s still plenty of time for sales to recover, especially as the weather’s begun to turn heading into the festive Christmas frenzy.

M&S food was the standout performer in the first half, with demand here arguably more protected from high levels of inflation. At a more premium end of the market, M&S’ core customers aren’t as sensitive to price. Coupled with impressive margin growth, total underlying operating profits jumped significantly.

‘There’s also been good headway on the group’s reshape programme, which looks to pivot to new locations and refresh existing stores to create a more productive estate. Full-year guidance has been maintained, albeit performance is expected to be weighted towards the first half, with the group likely wanting to get through the Christmas period any potential move of the dial on expectations.

‘But the real talking point was the reintroduction of dividend payments, which should put a spring in investors’ steps. The yield is relatively low, but it marks a moment of significance for the group, and it’s a real statement of confidence around the outlook for the business from M&S’ management.

‘The group plans to hold a capital markets day this afternoon where investors will be hoping to hear more detail on its £400m cost-cutting programme, as well as updates on the levers being pulled to fuel further growth in market share and margins.’

Weaker demand from free-to-air broadcasters for ITV content will impact its studios business in the fourth quarter, the media group has warned.

ITV told shareholders it expects to see growth of around 3 per cent for the unit in 2023, down from its previous mid-single digit forecast.

ITV has been growing its studios business and ITVX streaming service to help smooth volatility in advertising demand.

It said the strategy delivered total revenue growth of 1 per cent for the first nine months to £2.98billion, despite a total ad revenue fall of 7 per cent over the period.

Owner of the Mirror newspaper Reach is set to slash 450 full-time jobs as part of a cost-cutting drive.

Reach said it expected to replicate its 2023 plan to achieve a 5 to 6 per cent reduction in annual operating costs, which ‘is on track to be delivered’, in the next financial year.

It told shareholders the move would ‘strengthen its position as a leading digital publisher and mitigate against the backdrop of continuing inflationary pressures’, while driving ‘better customer value’.

Jim Mullen, chief executive of Reach, said:

‘Our industry has a history of change and the future will undoubtedly involve yet more. That’s why it’s essential we set ourselves up to win, by making our operations suited to an increasingly fast-paced, competitive and customer-focused digital world.”

‘Hard work over the last few years means we have established ourselves as a leading digital publisher. But there’s more to do and today is about organising our business to deliver against that challenge.’

Marks & Spencer smashed profit forecasts in the first half with earnings before tax and nasties coming in more than 75 per cent higher at £360.2million, but the retail giant urged cation ahead amid the impact of high borrowing costs and a volatile geopolitical environment.

Analysts has expected the group to post a profit of £276million for the quarter, up from £205.5million made in the same period last year.

The 139-year old clothing and food group said its trading momentum had been maintained through October and it was planning for a good Christmas, with customers already responding positively to its ranges.

But it cautioned the economic outlook remained uncertain and flagged the impact on the consumer from the highest interest rates in 20 years, deflation, geopolitical events, and erratic weather.