European firms seek cost-cutting schemes

French car maker Renault announces more than 7,000 job cuts while British music retailer HMV faces risk of closure.

    European firms seek cost-cutting schemes
    HMV has cited competition from Apple's iTunes and online piracy for declining profits [Reuters]

    Renault, the French car manufacturer, has said it plans to cut its workforce by 7,500 jobs within three years.

    The company says it needs to reduce its headcount by about 17 per cent over the next three years to prevent further losses as European markets slump.

    Renault says it can achieve the cuts mainly by not replacing those who leave, and offering early retirement to older workers.

    Tuesday's announcement comes as jobless rates in France reach a 13-year high.

    In the UK, HMV, Britain's largest music retailer, is seeking protection from its creditors.

    Short for His Master's Voice, the 92-year-old company is looking to find buyers for its 238 stores that between them employ over 4,000 people.

    Hilco, the restructuring specialist that purchased HMV Canada in 2011, was watching the situation closely, a source close to the matter said.

    Media reports also named private equity firms Endless and Better Capital as possible suitors. Both firms could not be
    immediately reached for comment.

    Underlying sales had plunged 10 per cent year-on-year at Christmas.

    Stiff competition

    Like other music outlets before it, HMV claims stiff competition from online services both legal, like iTunes and Amazon, or illegal, like BitTorrent, has cut into its profits.

    A victim of similar pressures, Virgin Megastore France declared itself insolvent last week.

    Trevor Moore, the company's chief executive who joined the firm in September, said on Tuesday he was confident it would emerge from the administration process in some form.

    "We know that HMV is a well loved brand which has a high level of support amongst the public and we want to ensure that it remains on the high street," he said.

    He had "a plan in mind" that would see the firm surviving with a stores presence along with a new digital and online
    offer, though he would not elaborate or say what the optimum size of the store estate should be.

    Other High Street outlets are also suffering.

    Jessops, a camera retailer, closed its doors last week. Jessops' end came after Comet, an electronics giant, that went under just prior to the busy Christmas shopping season.

    SOURCE: Agencies


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