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Asda joins growing list of grocers to repay rates relief cash
3rd Dec 2020 13:45
(Sharecast News) - Asda is to repay the £340m it received in business rates relief, the latest supermarket chain to do so, the retailer confirmed on Thursday.
But John Lewis Partnership, owner of upmarket supermarket chain Waitrose, has confirmed it would not be returning the cash.
Walmart-owned Asda joins German discounter Aldi, J Sainsbury, Tesco and Wm Morrison in announcing this week that they will repay the money, after grocery sales surged during the pandemic. In total, the five grocers will return a combined £1.7bn.
Chancellor Rishi Sunak announced a 12-month business rates holiday for retailers earlier this year, primarily to help stores forced to close because of lockdown measures.
Asda said the relief had been "vital", and had enabled it to meet costs caused by the pandemic, such as paying shielding staff and making stores Covid-secure. "These costs have far outweighed the relief we have received this year," the retailer added.
Roger Burnley, chief executive, said: "As the hope of a vaccine and a more normal life returning in 2021 grows, we have confidence that we are in a strong position to again to the right thing for the communities we serve.
"We recognise that there are other industries and businesses for whom the effects of Covid-19 will be much more long lasting and whose survival is essential to thousands of jobs. We will therefore be discussing with the government and devolved authorities the best mechanism to ensure the relief we have received can go towards helping those that need it most."
But Waitrose warned of an "incredibly uncertain" outlook, telling Reuters: "We are incredibly grateful for this vital support because we have lost significant sales while our John Lewis shops have been closed, and have invested heavily to keep our partners and customers safe.
"We're a business owned by our employees and we don't intend to pay a bonus this year."
Listed rival Marks & Spencer has also said it did not plan to return the money, noting earlier this week that the relief had "enabled us to support our colleagues and our suppliers while continue to serve our customers in what have been incredibly challenging circumstances". M&S claimed £83.7m in rates relief in the first six months of its financial year.
In October, Tesco prompted criticism after it announced a dividend pay-out following a 29% hike in first-half profits. It initially said it would not return the rates relief cash but has since changed its stance, with the other major grocers following suit.
In a note published on Thursday, Shore Capital said it was surprised by both Tesco's and Wm Morrison's decision, "coming ahead of the key Christmas trading period, and we know, given the reaction of investors to us today, that many shareholders will be disappointed, to put it politely.
"Indeed, there is a question emerging on many investors' minds in terms to where shareholders sit as stakeholders to plc boards. No doubt after this decision, shareholders will be reflecting their views to the boards of Morrison and Tesco, noting that some will also welcome the decision from a reputational standpoint."
The Co-op told the Press Association on Wednesday that higher costs had so far outweighed savings from the rates holiday, and that it would make a final decision at the year end.
But John Lewis Partnership, owner of upmarket supermarket chain Waitrose, has confirmed it would not be returning the cash.
Walmart-owned Asda joins German discounter Aldi, J Sainsbury, Tesco and Wm Morrison in announcing this week that they will repay the money, after grocery sales surged during the pandemic. In total, the five grocers will return a combined £1.7bn.
Chancellor Rishi Sunak announced a 12-month business rates holiday for retailers earlier this year, primarily to help stores forced to close because of lockdown measures.
Asda said the relief had been "vital", and had enabled it to meet costs caused by the pandemic, such as paying shielding staff and making stores Covid-secure. "These costs have far outweighed the relief we have received this year," the retailer added.
Roger Burnley, chief executive, said: "As the hope of a vaccine and a more normal life returning in 2021 grows, we have confidence that we are in a strong position to again to the right thing for the communities we serve.
"We recognise that there are other industries and businesses for whom the effects of Covid-19 will be much more long lasting and whose survival is essential to thousands of jobs. We will therefore be discussing with the government and devolved authorities the best mechanism to ensure the relief we have received can go towards helping those that need it most."
But Waitrose warned of an "incredibly uncertain" outlook, telling Reuters: "We are incredibly grateful for this vital support because we have lost significant sales while our John Lewis shops have been closed, and have invested heavily to keep our partners and customers safe.
"We're a business owned by our employees and we don't intend to pay a bonus this year."
Listed rival Marks & Spencer has also said it did not plan to return the money, noting earlier this week that the relief had "enabled us to support our colleagues and our suppliers while continue to serve our customers in what have been incredibly challenging circumstances". M&S claimed £83.7m in rates relief in the first six months of its financial year.
In October, Tesco prompted criticism after it announced a dividend pay-out following a 29% hike in first-half profits. It initially said it would not return the rates relief cash but has since changed its stance, with the other major grocers following suit.
In a note published on Thursday, Shore Capital said it was surprised by both Tesco's and Wm Morrison's decision, "coming ahead of the key Christmas trading period, and we know, given the reaction of investors to us today, that many shareholders will be disappointed, to put it politely.
"Indeed, there is a question emerging on many investors' minds in terms to where shareholders sit as stakeholders to plc boards. No doubt after this decision, shareholders will be reflecting their views to the boards of Morrison and Tesco, noting that some will also welcome the decision from a reputational standpoint."
The Co-op told the Press Association on Wednesday that higher costs had so far outweighed savings from the rates holiday, and that it would make a final decision at the year end.