Sainsbury's to repay more than £400m in business rates relief
Supermarket joins Tesco, Morrisons in handing govt cash back
Sainsbury's on Thursday became the latest supermarket to bow to pressure and repay more than £400m in business rates relief received from the government to help cope with the coronavirus pandemic.
Rivals Tesco and Morrison on Wednesday said they would repay more than £850m as demands grew for the money to be returned in light of booming profits and dividend payments from supermarkets.
Sainsbury's said it now expected underlying profit before tax of at least £270m for the financial year to March 2021 on the basis that £410m in rates relief was excluded. It reiterated guidance for 2022 profits to exceed the £586m reported in the year to March 2020, despite now forgoing business rates relief of approximately £30m.
The government introduced the 12-month business rates holiday in March because it feared the pandemic would strain retailers’ balance sheets. However, the sector was classed as an essential service and saw sales soar in a wave of panic buying when the lockdown was imposed in late March.
Chief executive Simon Roberts said: “We believe it is now fair and right to forgo the business rates relief that we have been given on all Sainsbury’s stores."
“We are very mindful that non-essential retailers and many other businesses have been forced to close again in the second lockdown and we hope that this goes some way towards helping them.”
Sainsbury's said the board would also prioritise payment of dividends to shareholders over net debt reduction in 2020-21 and pushed back its target of at least £750m in debt cuts in the three years to March 2022. It now expected to hit the target by March 2023.