Johnson Service to axe 1,500 jobs as lockdowns batter hospitality sector
Workwear manufacturer Johnson Service Group is to cut more than 1,500 jobs after the Covid-19 pandemic caused volumes to slump.
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The firm said that over the last three months, volumes in its workwear division - which supplies industrial and food processing customers - had returned to pre-Covid levels.
But its hotels, restaurant and catering (HORECA) unit has been hit by the various regional and national lockdowns, which closed much of the hospitality sector. Volumes in October, particularly in the high-volume hotel linen plants, were 45% of normal levels.
JSG said: "The outlook for the remainder of the current year remains dependent on the level and impact of regional restrictions on the hospitality sector in December, particularly following the planned ending of the lockdown in England on 2 December."
In workwear, JSG said there was "an expectation that the lower level of new sales signed during the national lockdown, the increasing uncertainty for many of our industrial customers and the potential for further lockdowns will restrict the division’s ability to achieve organic revenue growth in the short term".
The Aim-listed group is therefore shutting a workwear site in Newmarket, with the loss of around 200 jobs. In HORCEA - where volumes and the timing of a recovery remain "unpredictable" - it will look to cut 1,350 jobs through a mixture of redundancies and natural churn by the start of 2021.
Chief executive Peter Egan said: "We have taken the right steps to manage our cost base and maintain a firm foundation for JSG, with the strength of the balance sheet and flexibility of resources and operations for future strong returns when the recovery emerges."
As at 1030 GMT, shares in JSG were largely flat at 120.24p.