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Strikes Railroad Retail Footfall

As 2022 draws to a close, the retail sector in the U.K. could use a bit of holiday cheer.

The future of discount fashion retailer Matalan remains up in the air as a decision on its new owner likely won’t be made until next year. Meanwhile, U.K. foot traffic at high streets were hampered by rail strikes last week during the peak holiday selling season.

At least retailers in Scotland and Wales had some good news regarding business rates.

Strikes railroad retail footfall

Rail strikes in the U.K. last week double teamed with a cold snap to flatten footfall at retail, according to British data firm Springboard.

Despite its place in the holiday shopping calendar, last week drew footfall that slipped 0.9 percent lower than in 2021 and 20.1 percent below 2019’s numbers. That’s on top of a 4.6 percent decrease in footfall from the prior week.

High streets were the hardest hit, with traffic there falling 1.8 percent from last year and 22.6 percent from 2019 on top of the 10.2 percent drop from the week prior. Springboard blamed the rail strikes for a 15.7 percent drop from the week before. Retail parks and shopping centers saw slight increases at up 1.6 percent and 0.8 percent, respectively, as shoppers frequented stores that were more easily accessible by car.

“Whilst the cold weather prevailed, which would undoubtedly have had some impact, the contrast with the results for the week before clearly demonstrate that it was the rail strikes that were the key impact on footfall,” Springboard director Diane Wehrle said. “By far the hardest hit of the three key destination types were high streets, which lost both shoppers who couldn’t reach towns and cities by rail, but also employees who chose to work at home last week.”

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Matalan

Former Matalan former board chair John Hargreaves is one of four bidders for the company he founded back in 1985.

Hargreaves stepped down from his role as CEO in September so he could qualify to bid for the low-cost fashion chain.

Matalan’s 350 million pounds ($412.5 million) in secured debt is due in July while another 130 million pounds ($153.2 million) comes up in 2024. The company got a six-month reprieve on the 350 million pounds’ original due date of January 2023. Compounding the company’s troubles is the lack of lending capacity in the debt markets, which surfaced earlier this year after Russia’s invasion of Ukraine.

Lenders reportedly including Invesco and two U.K. hedge funds put the chain up for sale in September.

The Hargreaves offer is in partnership with the private arm of activist investor Elliott Advisors, with each holding a 50 percent stake. According to British newspaper The Sunday Times, the other three bidders are Matalan’s senior lenders, as well as private equity firms Alteri and OpCapita.

Business rates in Scotland, Wales on hold

Business rates are holding steady for retailers across the U.K.

The rates are essentially a property tax assessed when a business occupies a physical space. The tax is calculated by multiplying the value of the space—a valuation officer makes a determination based on the estimated annual rental value—by a government set multiplier. It’s the multiplier that usually increases each year. Retailers have complained that they can’t survive the rate increases since the pandemic drew shoppers online and away from brick and mortar. It appears elected officials are finally listening to their outcry.

When new U.K. Finance Minister Jeremy Hunt delivered his budget to Parliament last month, his draft offered some relief for English retailers because it included a freeze of the business rate multiplier at 51.2 pence ($0.61), or 4.9. pence ($0.59) for small businesses. The freeze by the U.K. government is slated to last for a year to April 2024. Rates had been slated to rise in April 2023. He will deliver his Spring budget to Parliament in March 2023.

The Welsh government earlier this month also froze its business rate at 53.5 pounds ($65.09) until April 2024.

Following on the heels of the U.K. and Welsh governments, the Scottish government last week also elected to freeze its business rates at 49.8 pounds ($60.59) for basic rates. In Scotland, the higher the property value, the higher the rate. For the budget covering the 2023 to 2024 financial year, the government also froze its two other rate levels at 51.1 pounds ($62.17) and 52.4 pounds ($63.75).

Skechers opens Irish flagship

Skeckers now has a flagship store on Dublin’s Grafton Street.

The roughly 3,048-square-foot location aims to showcase the footwear brand’s product range and comfort technologies. Shoes, coordinating apparel and accessories are sold alongside a performance shop. The new store includes state-of-the-art technology from digital screens to colorful lightboxes presenting Skechers’ latest marketing campaigns.

Skechers described Grafton St. as one of the country’s “most highly trafficked districts.”

“Through our ambassadors Jamie Redknapp and Myleene Klass and our beautiful product showcase, our head-to-toe offering is on full display at our new flagship store on Grafton Street—and its central location alongside esteemed international retailers will attract consumers of every age to the latest Skechers offers, from our Skechers Hands Free Slip-ins™ styles to our extensive performance, fashion, sport, casual and work and children’s collections,” Peter Youell, managing director for Skechers in the U.K. and Ireland, said.

A look at the new Skechers flagship on Grafton Street in Dublin, Ireland.

“Skechers has an established network of stores across Great Britain and Ireland, and we continue to invest in key markets like this on our path to reach $10 billion in annual sales by 2026,” David Weinberg, Skechers chief operating officer, added. “This flagship destination adds dimension to our brand—building excitement and driving our comfort message home in a district that makes big impressions on consumers. We believe this new store’s an ideal centerpiece—ready to captivate and drive growth across Ireland and Northern Ireland as well as Europe.”

The new flagship expands Skechers’ presence in Ireland, joining the concept store on Henry St. and four retail destinations across greater Dublin. Including the new flagship, Skechers operates 112 retail stores across Ireland and the U.K.