Debenhams crisis piles pressure on Hammond
With 50 stores set to shut, boss backs Mail’s campaign on business rates
PRESSURE was last night mounting on the Chancellor to act on business rates after Debenhams announced plans to close 50 stores.
Philip Hammond was urged to help high street retailers facing crippling tax bills while online firms stand accused of not paying their fair share.
The latest calls came as Debenhams reported a near £500million annual loss – the worst results in its 240-year history. It will close a third of its 166 stores over five years, putting 4,000 jobs at risk.
Details of the crisis at Debenhams came just hours before online retailer Amazon unveiled bumper results.
The contrasting fortunes between the firms triggered fresh calls for Mr Hammond to take action in the Budget on Monday to save the high street.
Debenhams forked out £80million in business rates last year and more than £5million on its flagship store on Oxford Street alone – up 20 per cent on a year earlier. The figures are in stark contrast to rates paid by Amazon which came in at just £14million on its 14 warehouses across england and Wales last year.
The Mail has been campaigning for an overhaul of business rates, with more than 50,000 jobs lost this year as shoppers increasingly buy online. Toys R Us, Poundworld and Maplin all went bust this year, while other retailers such as Marks & Spencer, New Look and Mothercare have closed stores.
Sergio Bucher, chief executive of Debenhams – and a former Amazon executive – praised the Mail’s campaign last night in a move that piles further pressure on the Government to act.
‘The Daily Mail, and thank you for that, are very aware of the impact of business rates,’ he said.
‘At our Oxford Street store we paid around £5million last year in business rates which was up around 20 per cent on the previous year. Try to imagine £5million of business rates – that’s the equivalent of around 200 jobs that we are paying in just one store.
‘So when you are facing a tough market, having business rates that continuously go up is a clear headwind and we definitely need our Government to take action to establish a level playing field across the retail industry.’
Mr Bucher added that action on business rates was crucial in securing the future of the struggling high street.
I can’t pre-empt what the Chancellor is going to announce on Monday. The only thing that we are asking is to have a level playing field,’ he added. ‘What’s important to remember is that we need vibrant high streets because that helps the cohesion of communities and it keeps life inside our cities and town centres.’
Andy Street, former managing director of John Lewis, added: ‘The Government must make sure there is a level playing field for our retailers on the High Street.
‘Online and offline retailers must be treated equally when it comes to corporation tax, and the Government should act to make business rates fit for the 21st century.’
The £492million loss at Debenhams follows three profit warnings this year. The company has now seen its stock market value plummet from £1.5billion to £91.7million in six years. Department stores have been struggling with soaring rents, crippling business rates and fierce competition from online rivals.
John Lewis’s half-year profits were all but wiped out earlier this year and House of Fraser collapsed into administration only to be rescued by Sports Direct an hour later in a controversial £90million deal.
Tycoon Mike Ashley owns almost 30 per cent of Debenhams through the leisurewear firm, with speculation that he could try to buy the department store on the cheap.