Habitat makes redundancies as prelude to growth

The retailer hopes about 60 out of 223 central staff in London will opt for redundancy, which is being funded by a loan from owner Hilco and is expected to deliver annual savings of euro5m.

Cost-cutting is expected to put the business on a firmer footing and allow it to take advantage of improvements made since its acquisition by Hilco in December last year. Habitat, which has 72 stores across Europe, lost €40m (£35m) in 2009/10.

Sales over the last three months have beaten budget and soared 24% like-for-like, Habitat reported. The spring/summer range has “been very well received” and range extensions such as flooring and curtains will be tested in the run-up to Easter.

Habitat also intends to open at least six concessions in European department stores – including in the UK - during the spring/summer season. It has also agreed terms for a shop in the Zubiarte Centre in Bilbao, Spain, which is scheduled to open in June.

Habitat chief executive Mark Saunders said he was pleased with recent performance and the retailer continues to attract shoppers but said: “It is important that we take immediate action to reduce our overhead base in order to reverse the losses incurred under previous ownership.

“While it is never pleasant to announce redundancies, these staff reductions are essential to preserve the business into the future.

“A number of other initiatives are well under way to implement a major repositioning of the cost base without further staff reductions beyond those currently sought.”