B&M to forego rates relief as it beats estimates

Liverpool-based B&M European Value Retail said on Thursday it expects its annual earnings to be ahead of analysts’ estimates — as it became the latest retailer to announce that it will forego business rates relief.

B&M called on the UK Government to “create a level playing field that requires all essential and online retailers to contribute proportionately in terms of taxation and business rates.”

B&M CEO Simon Arora said: “We request urgent reform of the outdated business rates system that is contributing to job losses across the retail sector and is acting as a deterrent to B&M and other potential occupiers taking up vacant space in many locations.”

B&M is based in Liverpool and registered in Luxembourg — but its shares trade in London, where its stock has risen about 40% in the past 12 months to give the firm a current stock market value of around £4.7 billion.

In a trading update relating to its third quarter performance to date, and relating to business rates relief, B&M said: “Over the first 9 weeks of Q3 at B&M UK stores, there has been a steadily improving customer count and like-for-like sales growth has been slightly ahead of H1, but is expected to moderate over the balance of the financial year.

“Accordingly, the group now expects adjusted EBITDA (on a pre-IFRS 16 basis) for the twelve months to 27 March 2021 to be in the range of £600m to £650m.

“The analysts’ consensus estimate for FY21 adjusted EBITDA (on a pre-IFRS 16 basis) is currently £571m. 

“In line with its capital allocation policy, the board will continue to evaluate capacity to return any surplus cash to shareholders.   

“The above adjusted EBITDA range and consensus is prior to any voluntary payment of business rates in FY21.

“The group welcomed the Government’s business rates relief, given the disproportionate burden business rates places on physical stores versus online competitors, particularly at a time when the nature and duration of Covid-19 restrictions were unknown. 

“Although significant uncertainty remains, the group believes it is now right to forego the business rates relief granted to B&M, which is approximately £80m this financial year.

“Having voluntarily returned furlough money, B&M will now engage with local authorities on an appropriate mechanism to waive the business rates relief. 

“The group calls on Government to create a level playing field that requires all essential and online retailers to contribute proportionately in terms of taxation and business rates.”