Morrisons is set to shutter Rathbones bakery after exploring all options for the manufacturing facility, with almost 400 workers facing redundancy as a result, The Grocer has learned.
Speculation surrounding a potential acquisition of the 28,000 sq ft factory in Wakefield by Hovis has circulated this year. However, The Grocer understands that despite early stage talks between the two parties, an agreement on a deal could not be reached.
A spokesman for Morrisons confirmed the supermarket had conducted “a thorough review” over the past few months of the options for the future of Rathbones.
“After a period of growth and investment, the business has been lossmaking for a number of years,” he said. “Although we have tried several routes to return the business to profitability, none have been successful.
“This has led us to consider the possibility of closing the site.”
Morrisons is now in consultation with 378 employees at Rathbones.
“The current proposals do unfortunately mean that colleagues at the site are at risk of redundancy, and we will do everything we can to help those colleagues affected, including investigating whether there are any other suitable roles elsewhere in the group,” the Morrisons spokesman added.
The 450 in-store Market Street bakeries remained unaffected by the proposals and would continue to serve shoppers freshly made bakery products every day, the spokesman said.
Morrisons acquired Rathbones in 2005 after the bakery collapsed into administration. The site is part of the supermarket’s Myton Food Group manufacturing operation, which runs 18 food factories to supply its stores with a wide range of products.
Rathbones manufactures a 47-strong range of bakery items, including sliced bread, hot cross buns, muffins, crumpets, pancakes, naans and pittas.
The Grocer understands Morrisons is still exploring a way to maintain a smaller, specialised bakery operation to continue making products aside from traditional sliced bread.
“We are considering all alternative options, and want to work with our partner union BFAWU, together with employee representatives, on how we could change our current business model and safeguard as many jobs as possible,” the Morrisons spokesman said.
Last week, The Grocer reported newly filed accounts for Rathbones revealed the bakery slumped into the red, with pre-tax losses of £3.7m in year to 20 October 2023.
Morrisons this week announced it had pushed group debts down to £3.8bn, down by 40% from the £6.2bn following the takeover by private equity firm Clayton Dubilier & Rice in 2021.
The group recently concluded a debt amendment and extension exercise and made a further £200m repayment of debt. It means that since the CD&R acquisition, Morrisons has repaid a total of £2.4bn of debt.
Last month, Moody’s upgraded Morrisons’ secured debt from B2 to B1, reflecting the additional debt reduction and extended maturities, while also changing the outlook to ‘stable’ from ‘negative’.
CFO Jo Goff said: “I’m very pleased with the rapid progress of our deleveraging programme and our debt levels are now around 40% lower than in October 2021, whilst our retail estate remains over 80% freehold.
“Our operational progress is steadily improving as we invest in our colleagues, our prices, our store and logistics estate, our loyalty programme and our fresh food manufacturing operations. These investments are a central part of our plans to build a stronger, more competitive and more distinct Morrisons with traditional values powered by modern retailing practices.”
Morrisons sold off 337 forecourts for £2.5bn to fellow CD&R company Motor Fuel Group in January to help reduce its debt burden.
It also agreed in September to sell ground leases on 76 of its supermarkets to real estate investor Song Capital in a deal worth £331m.
CEO Rami Baitiéh has played down rumours that Morrisons might break its promise following the CD&R takeover not to sell off its in-house manufacturing arm.
In January, he told journalists: “I really believe our Market Street, our manufacturing, our production centres, our relationship with 3,000 British farmers… are strengths and competitive advantages to Morrisons.”
No comments yet