Retail group Frasers (FRAS) has hit out at what it called a ‘near worthless’ business rates support package for large retailers announced in the Budget, saying it would make it ‘nearly impossible’ for the firm to take on the ex-Debenhams stores it had planned to.
Frasers, which owns Sports Direct and Evans Cycles, said the £2 million rates cap on businesses from July 2021 to March 2022 will also mean it will need to review its entire portfolio to ‘ascertain stores that are unviable due to unrealistic business rates.’
£100 MILLION WRITEDOWN
The Mike Ashley-controlled conglomerate has struggled significantly during the pandemic and several lockdowns which have forced the closure of stores deemed non-essential.
Last month it reported that it expects to write down the value of its assets by more than £100 million due to the current lockdown.
In a statement to the market the firm said, ‘Whilst the retail industry as a whole has repeatedly asked for structural reform of business rates, none has been forthcoming. Frasers Group and many retailers would have expected suitable relief until structural reform is implemented.’
It added, ‘Frasers Group believes that retailers should pay the fair amount of rates in line with realistic rateable values, but instead we continue to have an unwieldy, overly complex, and out of date business rates regime.’
FRASERS’ VIEW ‘UNDERSTANDABLE’
AJ Bell financial analyst Danni Hewson said Frasers’ view was ‘understandable’ given Mike Ashley’s retail empire has ‘a lot of skin in the game’ with 992 stores across the UK.
She said, ‘Like many retailers its clear Frasers had hoped the Chancellor would use the budget to finally address the much-discussed inequalities between online and bricks and mortar stores, but once again that can was kicked down the road.’
Hewson said the group’s warning will be a blow for high street property investors but added, ‘Ultimately the future of our high streets will be decided by the consumer. Will they rush back to the shops once restrictions are lifted or has the shift to online become too ingrained?’
