A footwear chain with six shops across Tayside and Fife is the latest retailer to warn over store closures.
The boss of Shoe Zone has warned he could close 90 shops – around a fifth of its estate -in the next 18 months unless there is an overhaul of the business rates system.
The chain has 460 shops across the UK including outlets in High Streets in Dundee, Arbroath and Dunfermline and shopping centres in Perth, Glenrothes and Kirkcaldy.
The company said revenues dropped by more than £39 million to £122.6m in the financial year that ended earlier this month.
Its shops were closed between March 23, when lockdown started, and June 15. But even since then sales have only recovered to 80% of their previous levels.
The company ended its financial year this month with 460 stores, after closing 40 but opening 10 others over the 12 months. New openings are now on hold until conditions improve.
Soaring online sales were not enough to plug the gap left by a plunge in in-store sales.
A doubling of online sales have not been enough to make up for that fact, and Shoe Zone now expects to report a pre-tax loss of £10-£12m for the financial year.
Chief executive Alistair Smith said up to 90 shops could close unless there was a radical rethink of how business rates were calculated.
Mr Smith, who has warned of closures in the past, said the UK Government’s decision to suspend business rates in England during the Covid-19 crisis provided a “significant benefit” to the business and helped save high street stores.
Business rates are a devolved issue and the Scottish Government also gave a 2020/21 rates holiday for retail businesses.
“However, the (UK) Government has announced the reintroduction of the antiquated business rates system in April 2021 and to make matters worse has delayed the revaluation,” he said.
“The consequence to Shoe Zone will be the closure of up to 45 stores prior to April 2021 and the potential closure of a further 45 stores in the 12 months following the reintroduction.”
Mr Smith said rents have fallen significantly but rates are unlikely to have followed suit.
He warned: “Never has the rating system been more unfair. Our rates as a proportion of rent have increased from 26.4% in 2009 to 54.3% in 2019 and forecast to be close to 60% in 2021.
“This is unsustainable for most high street retailers and closures will continue unabated until the Government makes substantial changes.”
Shoe Zone will not pay a dividend as the company focuses on paying back its debts instead.
The chief executive added: “Shoe Zone has ended an incredibly challenging year with a robust plan and sufficient funding in place to ensure the future survival of the business.
“The exceptional growth in digital sales since the start of the Covid-19 pandemic demonstrates the flexibility of our operating model, and follows the decision to create an autonomous digital department in 2019.”
