Big name business leaders continue to wade into the debate of whether companies which have flourished during lockdown should return furlough and business rate relief to the Government.
Following on from the recent announcement by Iceland boss Richard Walker, the Co-op supermarket chain has followed suit and said it won’t pay back £66m in business rates relief even as its profits surge.
The Co-operative Group said that it will repay £15.5m in furlough support but won’t be paying back business rates relief despite reporting a jump in full-year profits.
In the year to 2 January 2021, it reported pre-tax profit jumped to £127m from £24m on revenue of £11.5bn, up from £10.9bn in 2019. Justifying its decision, the company said that as a community-based convenience retailer with a large store estate, it had a “disproportionate increase in costs” associated with keeping doors open, compared to larger supermarkets.
Allan Leighton, Co-op Group chair, said: “We were grateful for the Government support that allowed us to manage our businesses through the pandemic, particularly our Funeralcare business, which has been working with bereaved families in extraordinarily difficult circumstances.
“The pandemic turned our plans upside down and, while our revenues went up marginally, our costs rose dis-proportionately. We welcomed money from the Government on the basis that it was not a loan and we would not need to pay it back – and we took business decisions accordingly.”
Co-op reported that the food business saw sales up 3.5% compared to 2019, while like-for-like sales rose 6.9%. It was also reported that despite choosing not to pay back business rates relief, Co-op plans to hand annual bonuses to senior executives.
Another big retail name joining the debate was former BBC Dragon’s Den star Theo Paphitis saying almost half of sales at Ryman are now online, and that customers at his Robert Dyas and Boux Avenue businesses have also bought more online over the last year. Paphitis said time would tell whether shoppers will return to the high street and warned that if the ‘business destroyer” of business rates returned they would have a “catastrophic” effect on brick n’ mortar retail.