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Summary
- Sainsbury's, Asda, Aldi and B&M are in line with Tesco and Morrison’s in repaying the business rate reliefs
- The supermarkets enjoyed a boom in their sales during the summer lockdown but kept availing the government relief
- Later MPs criticised the retailers for paying out dividend to shareholders without letting go of the relief, which prompted them to take the action
Sainsbury, Asda, Aldi and B&M have joined the bandwagon to repay the business rates relief after Tesco and Morrison made similar announcements this week. Consequently, a total amount of £1.9 billion ($2.4 billion) will be handed over to the UK government by all these retailers.
Earlier in March, the government had exempted many sectors from paying these taxes on their stores to help the ailing economy.
The supermarkets experienced a jump in sales during the summer lockdown as people kept shopping for essentials despite lockdown and restrictions. The MPs criticised these retailers for accepting the business rates relief on one hand and paying out dividends to their shareholders on the other.
Tesco plc (LON: TSCO), the country’s biggest supermarket, recently announced that it would be returning £585 million of the rates relief claimed so far. It quoted that the risk of crisis had subsided, and it would no longer need the relief.
To Know More, Do Read: Tesco (LON:TSCO) to return £585 million of business rates relief
Similarly, Morrison’s (LON:MRW) said it would be waiving off a business rate relief for £274 million. CEO David Potts said that he was grateful to the government for taking swift action to help the whole sector sail through the Covid-19 disruption.
With Tesco and Morrison’s announcement, many competitors came under pressure and followed suit.
Let’s have a look at how other retailers have reacted to these moves. The UK’s second largest retailer, J Sainsbury PLC (LON: SBRY) announced yesterday that the company board had decided to forgo business rates relief of £410 million.
The company has performed well during the November lockdown much more than the board’s expectations.
Simon Roberts, CEO of SBRY, said that the company was proud in playing its part in feeding the nation, but now as the regional restrictions are likely to be in force, the group felt that it was only fair to forgo the relief.
Third largest supermarket chain Asda, whose majority stakes was recently sold by Walmart to Issa Brothers and TDR Capital, has also pledged to repay a total of £340 million towards the same tax.
Roger Burnley, President and Chief Executive Officer of Asda, said that the group recognised that other industries, who are still struggling, needed the financial support. He added that the vaccination progress has made them optimistic that people will be returning to normal lives by the next year and their business will also see a growth.
Aldi, the Germany-based chain and B&M, which provides food along with electrical goods, homewares, and toys have announced to repay the sums of £100 million and £80 million, respectively. Giles Hurley, CEO of Aldi UK, thanked his staff and colleagues for continuing to work relentlessly even during the lockdowns. He believed that returning the tax relief in full would go a long way in supporting the nation and other ailing sectors.
