June 21, 2017 / 2:12 PM / a month ago

UPDATE 1-Tesco to cut up to 1,100 jobs with Cardiff customer centre closure

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LONDON, June 21 (Reuters) - Tesco, Britain's biggest retailer, has proposed closing its customer service centre in Cardiff with the loss of up to 1,100 jobs, the company said on Wednesday, part of a broader drive to cut costs and improve margins.

The company said it was consolidating its two customer engagement centres into a single expanded operation in Dundee, Scotland, where 250 new positions would be created.

Tesco set out a plan last October to reduce operating costs by 1.5 billion pounds ($1.9 billion) over three years.

It needs the savings to help achieve its target of a group operating margin of 3.5 percent to 4.0 percent by the 2019-20 financial year, up from 2.3 percent in 2016-17.

"The retail sector is facing unprecedented challenges and we must ensure we run our business in a sustainable and cost-effective way, while meeting the changing needs of our customers," said Matt Davies, UK CEO of Tesco.

"We realise this will have a significant effect on colleagues in the Cardiff area," Davies said.

In February, Tesco detailed plans to replace 1,700 deputy managers at its "Express" convenience stores and in January it proposed a reorganisation of its distribution network with a net loss of 500 jobs.

Tesco is Britain's biggest private sector employer with a staff of more than 310,000. ($1 = 0.7890 pounds) (Reporting by James Davey; editing by David Clarke)

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