It’s looking like a clean-sweep for the online brigade in the great retail carve-up. Boohoo has bagged Debenhams and Asos is in pole position for the best bits of Arcadia, meaning Topshop, Topman and Miss Selfridge. This outcome, unfortunately, will maximise the number of store closures, and thus job losses, since both buyers will stick rigidly to their online-only formula. It also seemed unlikely even a few weeks ago.
JD Sports and Mike Ashley’s Frasers Group were contemplating bids to resuscitate Debenhams, albeit not necessarily in full 124-store form, while Next wanted to own Topshop and keep the shops open. Why couldn’t the old guard win the bidding?
In part, it’s because the pure online players are on a roll and eager to slot more brands into their existing infrastructure. Adding recognisable brands represents a relatively low-risk punt. But another feature, perhaps, was the handicap for any store-based bidder of business rates – or, more precisely, uncertainty over the government’s intentions for the property-based tax.
Will the Treasury extend the Covid rates holiday for another year, or even for six months? Since Debenhams’ annual rates bill was £75m at the last count, the question will have been relevant for anybody interested in trading the stores. It’s not one, though, that the Treasury has yet answered.
And is the government committed to long-term reform of rates, a levy that reflects property values that are seven years old? Ministers hint at reform but never get round to it. In drawing up their bids, JD Sports, Frasers and Next will have had to assume more foot-dragging.
Boohoo and Asos might have emerged victorious anyway, of course. Momentum is on their side, which is partly why Debenhams and Arcadia failed in the first place. Asos, for example, has run rings around Sir Philip Green for years in terms of dynamism and investment in Topshop’s core 20-something market. So let’s not overstate the role of business rates in the wider story.
But, equally, let’s not ignore it when it comes to today’s situation. Warehouses should pay more in rates and shops should pay less, reflecting up-to-date property values. Maybe, under a such a set-up, Debenhams and Arcadia could have survived longer in physical form under JD Sports or Next. We’ll never know. But several thousand people – those now likely to lose their store-based jobs – are entitled to wonder.
UK Covid respiratory treatment trials funded by US government
Congratulations to Synairgen. This Aim-listed company, a spin-out from Southampton University, has secured government funding for expanded clinical trials on a potential respiratory treatment for Covid patients not yet requiring hospitalisation.
The surprise is over the identity of the government. It’s the US healthcare agencies that are interested in the possible new application of a drug that is used already for multiple sclerosis patients. The partnership is under the US “Operation Warp Speed” programme. Synairgen’s shares, which had had a good run already, rose 10%.
Synairgen says it regularly updates the department of health in the UK on progress, which is why it’s odd the US seems keener to back more research. Maybe the department has its reasons but, if so, it’s not sharing them. Covid treatments are needed in addition to vaccines, the medical community says. It would be embarrassing if this homegrown treatment succeeds because of US public money.