Pearson swings axe again with 3000 job cuts

Troubled publisher Pearson today unveiled another 3000 job cuts in its struggle to cope with a slump in college book sales.

The FTSE 100 company, which under chief executive John Fallon has sold the Financial Times and its stake in the Economist to focus on education, said the latest round of redundancies would form part of the £300 million cost-savings programme it unveiled in May.

It follows the decision last year to slash 4000 jobs, taking the total job cuts to 7000.

The latest round of cuts came despite last month’s $1 billion (£760 million) sale of a 22% stake in publisher Penguin Random House.

Fallon, who faced calls for his head after a huge profit warning in January, said most of the cuts, which will reduce staff to around 29,000, will be in “technology, finance and HR and the overall management of the company”.

He added that they would not just be in its largest division, the US college textbooks business, which has suffered from lower enrolments as students rent instead of buy expensive textbooks.

On the location of the job cuts, Fallon said: “We’re looking more broadly across North America as we are in the UK and around the world.”

He added: “It’s not just about reducing costs, this is about setting Pearson up for growth. This is about Pearson [becoming] much more like the digital, consumer-oriented, fast-moving, innovating company that it needs to be.”

Investors initially welcomed the cost savings, but the shares quickly lost early gains, down 9p at 660p.

Pearson is slashing the dividend by 72% to just 5p for the first half of the year, although it had already warned it would lower the shareholder payout.

“We think this will persuade those who have held Pearson for income reasons to reconsider their position,” said Liberum analyst Ian Whittaker.

Sales in its US college business were “a little ahead of where we expected them to be” in the first six months of 2017, although it warned that book returns were “a little higher” than it anticipated.