Waterstones boss warns store closures loom without further rates relief

The high street book specialist, which operates 283 stores in the UK and Europe, was hit hard by the reimposition of tier-four coronavirus restrictions across London and much of the Southeast in the lead-up to Christmas. 

Waterstones, like many other retailers, has been in discussion with its landlords over rent holidays since the start of the pandemic. Chief executive James Daunt said that in the main “the vast majority of our landlords have been entirely responsive and sensible”.

While he said the retailer is not looking to make any store closures immediately, Daunt warned that if the government were to reimpose business rates payments in full once the current holiday expires at the end of April, his hand may be forced. 

“Frankly, in the current market, I think there will be fewer closures – other than if the government reintroduces rates. We have a chunk of relatively small stores in some really retail-deprived areas and we don’t make a penny in any of those,” he said.

“We keep them there because it’s important that we keep book shops, but the pandemic has made their economic situation worse. It’s made the wider pressures on the business worse. 

“The government thinks I’m going to continue running some of these stores, simply in order to pay some absurd level of rates, which bears no relationship to the rent I’m paying. The landlords are sensible and have brought down the rent but the government hasn’t. They need to address that.”

Daunt called on the government to extend the business rates relief period beyond April or pursue radical reform before then. 

He warned that reimposing rates payments in full, at the same time that other support measures like the furlough scheme are due to stop, would be “wholly unreasonable” and leave many high street businesses struggling.

“Is it really sensible to reintroduce business rates on shops that are shut by government mandate, the same government that wants to tax them in this quite disproportionate way? 

“That seems sort of monstrous. What is already an iniquitous tax becomes a totally outrageous one,” he said.

There had been some speculation that, due to the effects of the closures over Christmas, Waterstones had been exploring its options with regards to a possible CVA or other insolvency procedure, which Daunt strongly denies.

One property source told Retail Week that the retailer, like many others, was facing an increasingly large rent arrears bubble due to deferrals last year and had been in conversation with landlords about possibly slashing that by as much as half.