Retailer calls for business rates reform regarding online sector

Liverpool discount retailer B&M European Value Retail has called on the Government to reform the business rates system to create a balance for traditional retail and online retailers.

In its trading update for the third quarter the Liverpool-based group declared that it will repay the business rates relief it was granted during the coronavirus pandemic, which is worth around £80m this financial year, even though significant uncertainty remains, it said.

This is in addition to the voluntary return of the furlough money it was paid by the Government.

It said it will now engage with local authorities on an appropriate mechanism to waive the business rates relief.

B&M said: “The group welcomed the Government’s business rates relief, given the disproportionate burden business rates places on physical stores versus online competitors, particularly at a time when the nature and duration of COVID-19 restrictions were unknown.”

But it went on to urge the Government to create a level playing field that requires all essential and online retailers to contribute proportionately in terms of taxation and business rates.

Chief executive, Simon Arora, said: “We are proud of the role we have played in this crisis, working very hard in our supply chain and stores to ensure our shoppers can rely on us for their everyday essentials, whilst creating over 1,800 new jobs, making charitable donations to local food banks, extending discounts to NHS workers and currently supporting ‘Mission Christmas’, an important initiative that aims to deliver over £15m of gifts to 400,000 under-privileged children this Winter.2

He added: “We request urgent reform of the outdated business rates system that is contributing to job losses across the retail sector and is acting as a deterrent to B&M and other potential occupiers taking up vacant space in many locations.”

The update also revealed that the group expects to surpass consensus forecasts for its adjusted EBITDA for the fiscal year to March 27, 2021.

On November 12, 2020, the group announced that it had made a strong start to the second half of its financial year and, against a highly uncertain economic backdrop and continued impacts from COVID-19, B&M was well placed to continue to grow profitably in the UK while developing its French operations.

Over the first nine weeks of the third quarter at B&M UK stores, there has been a steadily improving customer count and like-for-like sales growth has been slightly ahead of the first half, but is expected to moderate over the balance of the financial year.

Accordingly, the group now expects adjusted EBITDA for the 12 months to March 27, 2021 to be in the range of £600m to £650m. The analysts’ consensus estimate for fiscal year 2021 adjusted EBITDA is currently £571m.

B&M said that, in line with its capital allocation policy, the board will consider capacity to return any surplus cash to shareholders.

The group said the adjusted EBITDA range and consensus is ahead of any voluntary payments of business rates in the financial year.

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