3rd Dec 2020 11:17
(Alliance News) - Aldi Stores Ltd on Thursday said it would, like J Sainsbury PLC, follow supermarket rival Tesco PLC in deciding to pay back business rates reliefs received from the UK government.
Aldi said it will return the full value of more than GBP100 million business rates relief it has received during the pandemic to the UK government and the Devolved Administrations.
Aldi UK Chief Executive Giles Hurley said: "Thanks to our amazing colleagues, we have been able to remain open during lockdowns and despite the increased costs we have incurred during the pandemic, we believe returning the full value of our business rates relief is the right decision to help support the nation. Our continued investment for our colleagues and our customers will remain unchanged."
A spokesman for Waitrose owner the John Lewis Partnership PLC, which received GBP51 million in business rates relief up to July 25, said: "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.
"The outlook remains incredibly uncertain and government support remains crucial to help us navigate the crisis. We’re a business owned by our employees – our partners, not external shareholders – and we don't intend to pay a bonus this year," it added.
The Co-operative Group Ltd said the amount spent on protecting staff and customers outweighed the savings. "Given the huge uncertainty we're facing…and the ongoing costs we are incurring, we'll consider our approach in terms of the government support we’ve received at year end," it said.
In March, the UK Chancellor of the Exchequer Rishi Sunak said the UK government would grant all retail, hospitality and leisure businesses a 100% business rates holiday for the next 12 months, with the intention of helping companies get through the Covid-19 pandemic.
Sainsbury's said it spent GBP290 million as a result of Covid-19 in the first half of its financial year, which was partially offset by GBP230 million of business rates relief.
The grocer's sales and profit was stronger than originally expected since the beginning of England's second national lockdown, hence the decision to forego business rates relief on all stores. Sainsbury's noted that due to this, it now expects an underlying pretax profit of at least GBP270 million of the financial year to March, which includes the assumption it will forgo around GBP410 million in business rates relief.
In the year before, the group's underlying pretax profit was GBP586 million, suggesting a 53% year-on-year decline at least.
"In the event that the business delivers profits and cash generation at least in line with its current expectations, the board believes that shareholders should not bear the full short-term financial impact this year of the business making the right decisions for customers and colleagues through the Covid-19 pandemic. Therefore, when considering free cash flow allocation this year the board will prioritise payment of dividends to shareholders over net debt reduction," Sainsbury's added.
Chief Executive Simon Roberts said: "We remain focused on delivering the plan we set out at our half year results. We continue to urge [the] government to review the business rates system to create more of a level playing field between physical and online retailers."
On Wednesday, Wm Morrison Supermarkets said it was planning to waive GBP274 million of business rates for the 2021 financial year, following Tesco's announcement that it will repay GBP585 million of business rates relief received that same day.
Shares in J Sainsbury were up 3.3% at 216.74 pence, Tesco were up 1.5% at 227.80 pence and Morrisons were down 0.8% at 177.29 pence in London on Thursday.
By Zoe Wickens; [email protected]
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