House of Fraser experienced the negative impact of the 2017 Rating Revaluation, which Colliers believe substantially added to its costs.
Analysing House of Fraser’s 60 stores in England and Wales, Colliers estimate that House of Fraser faced a business rates bill in 2017/18 of around £38m and this would have been rising to £40.3 m in 2018/9. Moreover, some individual stores saw big rises following the 2017 Business Rates Revaluation. The House of Fraser store in Oxford Street, for example, saw a ratable value increase of over 57%, from £5.73 million to £9.01 million following the revaluation.
In terms of actual rates paid this means that the Oxford Street Store alone saw a rates bill of £4.3 million in 2017/8 compared to £2.96 million 2016/7, a rise of nearly 46%. And this figure was on its way up further, given the Government’s 5 years transition scheme. By 2021/22 House of Fraser, Oxford Street would have been paying business rates of over £5 million a year.
John Webber, Head of Business Rates at Colliers, commented: “Like many other retailers, it’s no wonder House of Fraser had to shut stores and is trying to reduce its rent bills and even cut its store sizes in some areas. As business rates are tied to rental values, it would be mad not to. House of Fraser, Debenhams, Toys R Us, Laura Ashley - the list of retailers with uncomfortably high business rate bills is never ending. As such businesses struggle against the competition from the online retailers and cope with uncertainty over Brexit, wavering consumer confidence and the rise in the NLW for staff, it is no wonder the cracks in the system are growing.”
Read more from colliers.com, Impact of Crippling Business Rates Contributed to House of Fraser's Weaknesses Says Colliers, 8.06.2018.