Leicester-based retailer Shoe Zone has said it could shut up to 90 stores over the next 18 to 24 months if the government delays the rates revaluation.
The chain said that the revaluation postponement would result in “the closure of up to 45 stores prior to April 2021 and the potential closure of a further 45 stores in the 12 months following the reintroduction”.
This represents up to 20% of its 460-store estate, which is mainly in town centres and retail parks.
Chief executive Anthony Smith said: “The suspension of rates in April 2020 was a significant benefit for our business in FY20 and was in line with the government’s desire to save the high street.
“However, the government has announced the reintroduction of the antiquated business rates system in April 2021 and to make matters worse has delayed the revaluation.”
He said that after the government delayed the revaluation by two years in 2015, the business lost £1.25m per year, costing it £2.5m in total.
“The latest revaluation delay will be even more costly as rents during the period have fallen significantly further and consequently rateable values should have fallen broadly in line with rents,” said Smith.
“Never has the rating system been more unfair. Our rates as a proportion of rent have increased from 26.4% in 2009 to 54.3% in 2019 and are forecast to be close to 60% in 2021. This is unsustainable for most high street retailers and closures will continue unabated until the government makes substantial changes.”
Shoe Zone closed 40 stores, but opened 10 “big box” store concepts, during the year ending 5 October. At the year-end, 50 big-box stores were trading. All future openings are on hold until trading conditions improve, while a “small number” of relocations will take place.
The retailer also warned of a loss before tax for the period in the range of £10m to £12m, caused by temporary store closures during lockdown.
Shoe Zone highlighted a “challenging” H2 this year. Store trading since reopening in June fell by around 20% year-on-year. Digital trading soared by around 100% on the previous year, although this did not fill the deficit from store sales.
The retailer generated revenue of around £122.6m for the period, down by 24.3% on the previous year.
Shoe Zone closed the financial year with a net cash balance of £6.3m, down from £11.3m in 2019. No dividend will be paid in relation to FY20, as the board prioritises debt repayment.
It does not expect to restart a dividend policy until its 2024/25 financial year.
It added that while pension funding has been agreed with the pension trustees up until the next triennial valuation in March 2022, it is expected that additional funds will be needed for one of the legacy pension schemes.
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