// The Weston family may need to reinvigorate their department stores businesses following the impact of the pandemic
// Lockdowns and removal of tax-free shopping may trigger a £680m write-down
// The Weston family’s Wittington Investments has committed to providing financial support
The billionaire Weston family could be forced to shore up its department stores businesses, which include Selfridges, as Covid-19 restrictions continue to wreak havoc on the retail industry.
The coronavirus lockdowns and the removal of tax-free shopping for overseas tourists risk a write-down on up to 80 per cent of the company’s goodwill, equivalent to £680 million.
In the latest accounts filed for the year to February 1 2020, Selfridges Holdings Europe Limited (SHEL Holdings) warned that there was a “severe but plausible” scenario which could see its local banking covenants breached in the UK.
SHEL is the holding company for the Westons’ department store and online retailing businesses including Brown Thomas and Arnotts in Ireland, de Bijenkorf in Holland, and Selfridges in the UK.
The company said it remains confident on renegotiating with its covenants, but said parent company – the Weston family’s Wittington Investments – has committed to providing the business with financial support in the “unlikely event” it is unable to secure looser terms.
It said it has also been granted access to a £300 million commercial paper facility, which is available until March 2021, for 12 months.
SHEL said it had been forced to take into consideration the impact of the pandemic as well as the removal of the VAT Retail Export Scheme in its budgets and five-year plans.
Last month, Selfridges managing director Anne Pitcher said that the department store had endured its “most difficult year” in its 113-year history as the pandemic forced the closure of non-essential retail in the UK.
In the year to February 2020, the luxury department store posted a 10 per cent drop in operating profits year on year to £88 million, while sales increased by seven per cent to £1.97 billion.
City centres, particularly London’s West End, have been affected by a lack of footfall in the last year with international and domestic tourists, as well as office workers, avoiding such areas in the wake of Covid-19.