Tesco is to close two UK distribution centres

Tesco is to close two UK distribution centres

UK retail giant Tesco is to close two of its distribution centres – which will include the relocation of its garment operations – in a move expected to result in up to 1,000 job cuts.

The supermarket retailer, which sells the F&F clothing line, says the changes form part of a wider transformation programme that has been taking place over the last two years. The proposed changes will reduce the number of Tesco distribution centres in the UK from 25 to 23.

"As the needs of our customers change, it's vital we transform our business for the future," says Matt Davies, Tesco CEO for the UK and Republic of Ireland. "These changes will help to simplify our distribution operations so we can continue to serve our customers better. Our priority throughout this process has been our colleagues and we will continue to do all we can to support them at this time."

More specifically, Tesco will close its Welham Green distribution centre and move its grocery operations to the Reading distribution centre. It will also bring the majority of general merchandise into one distribution centre at Middlesbrough, resulting in the closure of its Chesterfield distribution centre.

Tesco will withdraw its hanging garments from the shared distribution centre it has in Daventry, currently operated by third party DHL. Its clothing operations will now move to the group's nearby Tesco Daventry distribution centre. The retailer is also bringing all warehouse operations currently carried out by DHL and Wincanton in-house.

Finally, Tesco says it will simplify the management structure across all distribution centres. The changes are expected to be in place by June.

While the company has not put a figure on the number of redundancies as a result of the changes, reports suggest this could run to 1,000.

However, Tesco says it expects to create jobs, reportedly around 500, within other sites across the company's distribution network, including Reading and Middlesbrough, as well as the creation of colleague support roles in the majority of centres.

The news comes as the retailer prepares to update the market on its third-quarter and Christmas trading performance on 12 January. Shore Capital analysts are anticipating like-for-like sales growth for Tesco UK within a range of 1.25-1.75%.

Analyst Clive Black adds: "Whilst these adjustments will be disruptive to the lives of many workers, which is always a concern for good senior management that we believe Dave Lewis (CEO) and Matt Davies (UK & Ireland CEO) to be, we welcome the ongoing progress the company is making with self-improvement, the changes serving to enhance confidence as to the delivery of aspired profit targets."