LONDON (Reuters) - Mike Ashley’s Frasers Group (FRAS.L), formerly Sports Direct, said it would reassess the viability of some of its stores following a British government decision to delay the next business rates valuation until 2023.
Business rates, a particular burden for retailers, are taxes to help pay for local services, charged on most commercial properties. They are currently calculated according to the rentable value of a property.
In March the government promised a “fundamental review” into the long-term future of business rates and, to help retail, hospitality and leisure sectors during the coronavirus crisis, exempted them from the tax for a year. The sectors are struggling with thousands of jobs already lost.
But on Tuesday the government said the next revaluation would not take effect until 2023 based on property values in April 2021 so they reflect the impact of the pandemic.
That means next year’s business rates will be paid based on values from 2015.
“With the High Street already in meltdown, COVID-19, the lockdown, and its after-effects are now pulverising what remains,” Frasers, which trades from about 500 UK stores, said in a statement on Wednesday.
“Yet the government stands aside and has buried its head in the sand on the critical business rates issue, raising unfair and uneconomic revenue sums from already distressed businesses.
“Not only has it kicked the can down the road, it has also kicked businesses when they are clearly down,” it said.
Frasers noted that some of its House of Fraser stores pay no rent but still lose money and that a business rates correction could have dramatically changed their economic viability.
“However with yesterday’s announcement, Frasers Group will again have to carefully review the viability of a number of stores within its portfolio,” it added.
Shares in Frasers, 64% of which are owned by Ashley, closed down 2% at 282 pence, valuing the business at 1.45 billion pounds.
Most of Ashley’s outlets are still called Sports Direct, though the corporate name was changed as the group also now owns the House of Fraser and Flannels chains.
Reporting by James Davey; Editing by Mark Heinrich