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(Adds Tesco, M&S, background)
LONDON, Dec 2 (Reuters) - British supermarket group
Morrisons on Wednesday joined market leader Tesco
in deciding to pay government business rates for the
period of the COVID-19 pandemic.
In March, the British government exempted all retailers from
paying the tax on their store networks for the 2020/21 year to
help them get through the crisis.
Britain's supermarket groups have performed well during the
pandemic but have been criticised by lawmakers and media for
paying shareholders dividends whilst receiving taxpayer money in
the form of property tax relief.
They justified taking the relief because of the huge costs
they incurred in feeding the nation during the crisis.
However, earlier on Wednesday, Tesco said it would repay the
585 million pounds ($782 million) it has claimed because some of
the risks of the crisis were now behind it and returning the
money was "the right thing to do."
That stance put pressure on rivals to do the same.
Morrisons, the UK's fourth largest grocer, later committed
to paying business rates for the coronavirus period in full.
It said the total amount to be paid will be 274 million
pounds ($366 million) of which 230 million pounds relates to its
2020/21 financial year.
Morrisons said it now expected direct COVID-19 costs to be
around 270 million pounds, about 40 million pounds more than its
estimate in September.
Excluding the business rates payment Morrisons still
expected 2020/21 underlying pretax profit in line with its
expectations.
The group also plans to pay a special dividend of 4.00 pence
per share to shareholders in January. The payment relates to the
second half of its 2019/20 year, which pre-dates the crisis.
It forecast 2020/21 year-end net debt to be around 1.7
billion pounds and said it had no plans to pay a special
dividend for that year.
"We are grateful for the government's swift action at the
start of the pandemic which enabled the whole sector to face
squarely into the challenges and disruption caused by COVID-19,"
said CEO David Potts.
Morrisons shares closed down 2.3%, while Tesco's were down
1.9%.
Shares in Sainsbury's were down 2.9%.
Sainsbury's and Walmart owned Asda declined to
comment.
Clothing and food retailer Marks & Spencer said it
has no plans to return the relief. M&S claimed business rates
relief of 83.7 million pounds ($111.4 million) in its first half
to Sept. 26 and can claim for its second half too.
($1 = 0.7484 pounds)
(Reporting by James Davey; Editing by Elaine Hardcastle)
