// Shoe Zone said it expects 90 store closures if business rates are reintroduced in April
// CEO Anthony Smith said the current system is “antiquated”
// Since reopening in June, retail sales have been down broadly 20% year on year
Shoe Zone has warned that the return of business rates in April could see it close up to 20 per cent of its store estate over the next two years.
The shoe retailer’s chief executive Anthony Smith said the current system is “antiquated” and if it is introduced, Shoe Zone will be forced to close up to 45 stores prior to April and a further 45 stores in the 12 months following.
“The suspension of business 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,” he said.
“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. Never has the rating system been more unfair.”
Smith also said the retailer’s rates as a proportion of rent have “increased from 26.4 per cent in 2009 to 54.3 per cent in 2019 and forecast to be close to 60 per cent in 2021″.
“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,” he said.
“This is unsustainable for most high street retailers and closures will continue unabated until the government makes substantial changes.”
Shoe Zone saw its revenues drop by 24 per cent to £122.6 million for the 52 weeks to 5 October, exacerbated by “challenging” trading conditions in the second half.
It now expects a loss before tax for the period in the range of £10 million to £12 million as a result of the closure of its store estate due to the late March lockdown.
Since reopening in June, retail sales have been down broadly 20 per cent year on year, with online sales up around 100 per cent.
Shoe Zone ended the year with 460 stores, having opened 10 Big Box stores and closed 40 stores during the period.
The retailer closed the financial year with a net cash balance of £6.3 million, down from £11.3 million the previous year.
No dividend will be paid for the year, and the board does not expect to be able to be paid again until at least the 2024/25 year.