The Weston family, renowned owners of Selfridges and other prestigious department stores across Europe, find themselves at a crossroads as they grapple with the pressing need to infuse cash into their business. This urgent financial dilemma arises in the wake of a sharp decline in tourist footfall, enforced closures of stores, and the recent termination of the tax-free shopping scheme for tourists visiting Britain. The parent company overseeing these iconic department stores, SHEL Holdings Europe, has recently disclosed its financial accounts for the fiscal year ending in February 2020.
Despite a modest rise in business revenue to £1.522 billion, there has been a notable downturn in pre-tax profits, nosediving from £103.3 million to £37.8 million. The net profit has also taken a hit, plummeting to £31.1 million from £82.2 million. On a somewhat positive note, the EBITDA figures show an improvement, climbing to £299 million from £206 million. Concerns have been raised about a potential breach of UK banking covenants due to the persistent impact of COVID-19 restrictions. Nonetheless, there is a glimmer of hope as the company looks to revamp these agreements with the backing of Wittington Investments, the ultimate parent firm overseen by the Weston family.
In addition to the financial challenges faced by the company, there is the added hurdle of the elimination of Britain’s VAT Retail Export Scheme. This alteration means that tourists visiting the UK will no longer be eligible for VAT refunds on their high-end purchases unless they choose to have their goods shipped back to their home countries. This policy shift has sparked concerns among retailers, including the esteemed Selfridges, who fear a decline in the attractiveness of the UK as a shopping haven for tourists. While the government foresees a boost in VAT revenue, industry players anticipate a potential shift in consumer spending towards cities like Paris and Milan, potentially resulting in financial setbacks and workforce reductions in the UK. Amidst these intricate challenges, the Weston family must chart a course of action that involves injecting more resources into their department stores to secure their longevity in these testing times.
References:
1. UK Government: VAT refunds for overseas visitors
2. BBC News: Selfridges owner Weston family injects £100m into stores
