Shoe Zone warns of potential store closures due to unfair business rates
Value footwear retailer, Shoe Zone has warned of possible stores closures. The business announced it could close as many as 100 of its stores if business rates in the UK do not progress.
Chief Executive Officer, Anthony Smith said in an interview on BBC's Wake Up To Money show, that business rates are a key concern for the brand and it is holding back physical retail and the regeneration of high streets in Britain.
Smith continued to say that nearly a fifth of the retailer's stores are at risk if business rates do not progress and that the business will review each case one by one as "it's a simple maths question. Every time a lease comes up, we'll look at the mathematics of it."
In 2019, Shoe Zone saw underlying pre-tax profits slip 15% to £9.6 million for the year to 5 October as it was hampered by rising costs. The retailer said that high business rates have been a particular burden and have weighed down on store expansion plans.
The overall value of the property Shoe Zone occupies have been severely affected by business rates and property taxes. Critics have complained that such rates places an unfair pressure on physical retailer stores in comparison to online brands.
The transitional relief system is proving to be a major issues to business rates, which was introduced at a period of time where rents were increasing and transitional relief stages was brought into the industry to increase business rates over a period of years. However this compromise is neutralised by any business rate reduction that tenants in stores where rents are decreasing should also be spread across stages over several years.
Although rent rises are no longer a concern, this has resulted in fashion retailers experiencing lower footfall and having to pay heavy rate bills despite agreeing on lower rent rates.
Smith said that “there is a lot of talk about the regeneration and repurposing of town centres, which we are all up for. But whatever goes into those shops, the rateable value is still simply too high.”
Despite a great deal of Shoe Zone's stores being at risk of closure, Smith also said that recent openings of out-of-town retail stores and online sales were "going well".
The company’s portfolio consists of over 450 high street stores containing the core Shoe Zone product range and over 40 larger out of town retail units which also feature brands such as Clarks, Skechers and Hush Puppies.