First big retail casualty of 2020 as Beales goes into administration
The company’s website is offline but the physical stores remain open and trading as a going concern. They’re still currently accepting all gift vouchers, customer deposits and refunds/returns although customers would be advised to spend them quickly.
The stores employ 1,300 direct workers in their branches and a further 300 working on branded concessions within them such as Tommy Hilfiger.
The company had been in negotiations with landlords to secure potential rent reductions but ultimately this wasn’t enough.
Chief Executive Tony Brown had previously decried the “lunacy” of high business rates and told the Bournemouth Daily Echo: “I can’t predict which stores will stay and which stores won’t because it all depends on landlords and local government.”
This is balanced with news that Beales had paid more than £1m extra in business rates than it should according to property analysts Colliers International.
Their research shows that Beales had overpaid by £1.06m since 2017 due to the downwards phasing introduced following the revaluation of business rates that year.
Beales should have been due a 14% reduction in rates to reflect the 14% fall in rateable value although it actually saw a 3% drop in 2017/18 followed by drops of 1% in 2018/19 and 2% in 2019/20.
Transitional relief was designed to reduce the increase by which rates would rise following an upwards rent revaluation, staggering the rise over a four-year period.
In order to keep the total business rate tax take revenue neutral however, this has been funded by businesses based in areas where rents were dropping and who should therefore have seen their own business rates payments reducing.
John Webber of Colliers said: “In a period in which retail has already been struggling due to internet competition and other rising costs, such rate reductions have been pitifully inadequate and have certainly contributed to the business’s current demise.
“Many struggling companies have perversely been paying more than they should be, whether or not they could afford to.”
It’s not just tenants that are feeling the pinch following news that 2019 was the worst ever year for retail figures.
Landlords are also feeling the dual sting of reduced rent takes and empty units.
Intu Properties, owners of some of the UK’s biggest shopping centres including the Metrocentre in Gateshead, the Trafford Centre in Manchester and Lakeside in Essex are widely expected to approach shareholders for up to £1bn additional capital.
Their share price has reduced by 80% from the previous year following several high street mainstays including Debenhams, House of Fraser and the Arcadia group including Topshop, Topman and New Look entering into CVA agreements which have allowed them to close unprofitable stores and reduce rent on remaining ones.
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