M&S business rate liabilities based on £570m rateable value

Marks & Spencer’s business rate liabilities are now based on a rateable value of over £570m, according to real estate services company Colliers.

Colliers said that increased business rates and fixed costs will only add to the pressures that UK retailers are currently facing. M&S has announced a 1.4% drop in like-for-like sales during the last 13 weeks of 2017, with food sales down by 0.4% clothes and clothes dropping to 2.8%.

In the Autumn Budget 2017, chancellor Philip Hammond announced that he would bring forward the planned switch from RPI to CPI for the calculation of business rates by two years to April 2018. He also committed to amending the revaluation period from every five years to every three years.

The last revaluation of business rate values took place in 2017 following a seven-year period without a revaluation. As a result, some retailers have been landed with significant increases in the rateable value of their property.

John Webber, head of rating at Colliers International, said: “The government decision to delay the business rates revaluation to 2017 and to introduce the policy of transition is certainly impacting on UK retailers, either by giving massive rises in some areas and little relief in others.  By delaying businesses rates reaching their true levels, retailers with stores in the less attractive areas have been forced to pay for the better ones for far too long.”

M&S has seen the rateable value of their stores in Hampstead, Westfield and More London rise by 170%, 133% and 111%, respectively, said Colliers. The company is not the only major UK retailer to experience rising rates, with Debenhams’ rateable value now reaching £150m and other stores based in Westfield also dealing with rate rises of 133%.

“As such businesses struggle against the competition from the internet providers such as Amazon, who do not pay such rates on their stores and cope with uncertainty over Brexit, wavering consumer confidence and the rise in the National Living Wage for staff, it is no wonder they are feeling vulnerable,” added Webber.

“Retail pain has not stopped and is on the increase. Whilst a 1.4% drop in sales might not seem enormous, it does equate to a serious issue when fixed costs, such as business rates remain the same and are rising.”

In the Q3 trading results statement, M&S chief executive Steve Rowe said that the company had had a “mixed quarter” with “better Christmas trading in both businesses going some way to offset a weak clothing market in October and ongoing underperformance in our Food like-for-like sales”.

The company has appointed a new CFO to replace Helen Weir, who is leaving to pursue a portfolio career. Humphrey Singer, current Group FD of Dixons Carphone plc, will replace Weir, who leaves M&S on 31 March this year.