Sports Direct owner Mike Ashley warns of possible shop closures

Mike Ashley's Frasers Group has said it could be forced to close stores due to the cap on business rates relief announced in the Budget.

It said the £2m cap rendered the package "near worthless" for large retailers.

The group, which includes Sports Direct, House of Fraser and Evans Cycles, said retailers needed a total overhaul of the business rates model.

The rates holiday for non-essential retailers in England will end in June.

From the start of July, business rates - which are taxes on properties used for commercial purposes - will then be discounted by two-thirds for nine months, up to a maximum of £2m if businesses are closed.

Frasers Group said in a statement that the business rates relief package would "mean we need to review our entire portfolio to ascertain stores that are unviable due to unrealistic business rates".

It warned last month that it expected a £100m hit due to continuing restrictions on trading.

Frasers Group, which is owned by Sports Direct founder Mike Ashley, had already announced a number of store closures in 2020.

The group suggested that many retailers would have expected further rates relief "until structural reform is implemented", adding that firms "should pay the fair amount of rates in line with realistic rateable values, but instead we continue to have an unwieldy, overly complex, and out of date business rates regime".

Retail property expert Jonathan De Mello agreed. He told the BBC that the rates relief cap would "place a significant rates burden on retailers with more than just a handful of stores".

He suggested that retailers with stores in large shopping centres and city centre locations would be hit hard: "Some retailers pay more than £2m rates from just one store alone!

"The government missed an opportunity here to reform rates root and branch," he added.

In response to the chancellor's Budget, the British Retail Consortium also said it hoped to see the ongoing business rates review by government reduce the "burden" on retailers.

It added: "Without further funding, it is likely that many 'non-essential' retailers will struggle under sluggish consumer demand and high Covid costs."

In Scotland, retail, hospitality, leisure and aviation businesses will not pay non-domestic rates throughout the next financial year. The Welsh government has said hospitality, retail, leisure and tourism will get full rates relief for another 12 months.

Frasers Group also said on Friday that the business rates relief cap in England would "make it nearly impossible to take on ex-Debenhams sites with the inherent jobs created".

The Debenhams brand and website were bought by fast fashion firm Boohoo in January, leaving many of the chain's 118 remaining shops vacant.

It has been reported that Frasers Group is currently in talks over taking on a number of former Debenhams stores.

Billionaire Mike Ashley had made an offer for Debenhams when it was initially put up for sale last April, which was rejected.

The businessman had previously built up a 29% stake in the chain, but saw his £150m holding wiped out in 2019, when the company fell into administration and then ended up in the hands of its lenders - a consortium led by hedge fund Silverpoint.

The rise of online shopping, expensive rents and coronavirus shutdowns have put department stores chains under increased pressure.

Last year, 139-year-old Beales closed all of its shops after falling into administration, while the BBC understands John Lewis is considering closing up to eight further department stores, on top of those already announced in 2020.