Search and find what you need faster.

Posts Tagged ‘retail’

Burberry, Budgets & Booms: What’s Really Going On in the UK Economy

Posted on: June 27th, 2025 by Alanah Lenten

Let’s be honest, not every headline feels relevant when you’re running a business. But behind the buzzwords and big numbers are signals that matter for your margins, your teams and your future plans. We’ve dissected some of the headlines to help you understand what’s going on and how to respond with confidence.  

What’s The Scoop? 

Retail rebounds (sort of) 

The UK retail sector has seen a 7% year-on-year increase in total retail sales in April, well above the 12-month average growth of 1.4%. Warmer weather, Easter spending, and a recent 0.25% interest rate cut by the Bank of England. This sounds positive, right? However, rising employer taxes and national insurance contributions which came out of the Autumn 2024 budget could weigh on retail profits despite higher revenues.  

Luxury market hit hard

Burberry, the UK’s flagship luxury brand, has announced it’s cutting 1,700 jobs globally following a £66m pre-tax loss. Despite the prestige, even heritage brands aren’t immune to recession fears and the knock-on effects of slowing global demand. If a brand like Burberry is recalibrating, smaller high-end brands may need to follow suit – quickly and strategically.  

UK leads the G7 but for how long?  

The UK is currently the fastest-growing economy in the G7, with 0.7% GDP growth in Q1 2025, surpassing expectations. This growth has been driven by strong performance in services, retail, and advertising (such as those on the FEBE Growth 100 list), supported by four interest rate cuts since last July. Again, this sounds positive. However, economists warn that this surge may not last and upcoming tax hikes and international trade uncertainties  (ahem, tariffs!) could undermine progress. 

What Should You Be Doing to React? 

Retail:  

  • Capitalise on the retail sector’s momentum and consumer confidence whilst it lasts by aligning product offerings with seasonal demand and spending habits. 
  • Budget carefully and price strategically. Factor in rising employer taxes and national insurance contributions that could erode profit margins even as revenue grows.  
    Questions on  tax planning and tax-friendly business structures? Get in touch with our Tax specialist, Leigh Sayliss.  

Luxury Market:  

  • Don’t wait for downturn to hit. Global economic challenges are on the horizon and changes must be made now to react to this in order to weather the storm for businesses in luxury and high-end retail – changes can feel brutal but essential.
    Our     Employment team can help navigate tough decisions with clarity. 
  • Take local legal advice if you have plans to open an international branch or enter a partnership with someone out of the UK.
    Contact our Head of International, Ricardo Geada, who will know the right people for your needs.  

UK Economy in G7:  

  • Take stock: What’s working? What’s not? What new opportunities are there for you and your business whilst also planning for incoming tax changes and international trade uncertainties? 
  • Stay informed about upcoming tax changes and trade agreements that could impact business operations. New markets may be opening  but so are new risks. We’re here to help you balance ambition with foresight. 
  • By staying agile and informed, businesses can position themselves to thrive in a rapidly evolving economic landscape.
    If you’re in retail, luxury, or impacted by the broader economy and want to explore how these changes affect you, please reach out to Charlotte Hamilton.  

Read the other articles in this edition here : The Fineprint – Edition 1 – July 2025 – Lawrence Stephens

Lawrence Stephens advises Salomon on store at Battersea Power Station

Posted on: June 3rd, 2025 by zhewison

Nickhil Mandora, Director at Lawrence Stephens, has advised Salomon on their latest UK store at Battersea Power Station. This is the third UK store Salomon has opened in the past year, with Nickhil advising on all lettings.

Founded in 1947 in the French Alps, Salomon is an outdoor brand creating high-performance gear for running, hiking, skiing, and adventure. The Battersea Power Station store will be focused on footwear, offering a collection of sport-style, running, and hiking shoes.

This letting solidifies Battersea Power Station’s status as an iconic and desirable shopping destination, home to lifestyle brands favoured by consumers.

Nickhil Mandora: “We are delighted to assist Salomon on their latest UK retail space in the iconic Battersea Power Station, marking a hat trick of stores in the capital for the brand. Salomon have been consistently innovating not only the products they offer but the services provided in-store and we are excited to continue our partnership with them”.

For more information on our services and expertise in the commercial real estate sector, please click here.

Lawrence Stephens advises Arc’teryx on Manchester store

Posted on: April 25th, 2025 by Natasha Cox

Lawrence Stephens Director Nickhil Mandora and Solicitor Sophie Levitt have advised Arc’teryx on their first UK store outside of London, located at New Cathedral Street, Manchester. The new store is Arc’teryx’s first foray into the UK retail market outside of London and represents a significant vote of confidence for the North West.

Arc’teryx, based in North Vancouver, British Columbia, is a Canadian company specializing in technical outdoor apparel and equipment for mountaineering and alpine sports.

The new store, set to open this summer, will be the brand’s fourth UK location, joining its other retail sites in Covent Garden, Piccadilly, and Battersea Power Station.

Nickhil Mandora has acted on the leases of each of these sites and said “We are delighted to have acted for Arc’teryx on their newest store located on New Cathedral Street, Manchester, which will no doubt have been with met excitement by fashion-conscious Mancunians. Arc’teryx are a brand that are at the top of their game, having managed to effortlessly tap into the zeitgeist, and we look forward to extending our relationship with them.” 

For more information on our services and expertise in the commercial real estate sector, please click here.

James Lyons comments on private equity and retail businesses in Retail Sector

Posted on: April 7th, 2025 by Natasha Cox

Director in the Corporate and Commercial team, James Lyons, comments on the trend of private equity firms investing in retailers, and discusses how these growth strategies can benefit both business and private equity buyers.

James’ comments were published in Retail Sector, 4 April 2025, and can be found here.

Speaking with Retail Sector about the trend of publicly listed retailers taking private equity, James explains that “if the business continues to benefit from access to institutional capital, stock liquidity, and the other advantages that come with a listing, then remaining public makes sense.”

He states that there are challenges that come with this, noting “the costs of listing, the scrutiny, and the increased pressure, especially with rising employer and NI costs, all add up. When those burdens become greater than the benefits, it’s easy to see why more retail companies are opting to go private.”

Commenting on the recent acquisitions of Walgreen Boots Alliance by private equity, James told Retail Sector that “Sycamore’s acquisition of Walgreens includes Boots, but that’s just one part of the wider business. A number of commentators believe that Sycamore will likely spin off Boots to focus more on the US retail market. It’s possible we could see Boots reappear on the public markets, perhaps through a demerger and a new listing in the UK. Alternatively, it could be sold to another private equity firm or a trade buyer.

“While it’s hard to predict exactly what form it will take, I’m sure the brand will endure.”

James explains that, for private equity firms looking for retailers to invest in, “it’s about identifying where investment can generate increased returns over the next few years and ensuring the business is positioned for long-term sustainability. Take Boots, for example. Its pharmacy element is heavily regulated, which may be of interest to some private equity firms, but not necessarily to all.”

James also notes that “retailers that can leverage technology to strategically enhance their business are likely to attract more private equity interest. Ultimately, the future of retail is moving towards digital, making it a key area for private equity firms, rather than traditional high street retail.” 

Speaking on the evolution of this sector, James commented “Retail now is very different from what it was two decades ago. It’s a blend of the traditional high street and the rapidly expanding online retail sector. The rise of digital technology and AI interfaces has really shaped the way consumers shop today. Private equity firms bring both expertise and investment, particularly in the digital and e-commerce space. Traditional retailers may not have had the same level of expertise or know-how, and that’s where private equity can make a real difference.”

He goes on to argue that this is not the be all and end all of business, stating that “public listings can still be a credible option for the right business at the right point in its cycle, if done for the right reasons. So, I don’t see this as a long-term trend. For example, it’s not beyond the realms of possibility that Boots could come back to the public markets at some point, if it makes sense for the business.

James concludes by suggesting that, overall, the strategy of the private equity firms is key to such deals, and that these are questions retailers must consider

“There has to be a commercial deal that works for both parties. What are the intentions of the new owner? What areas do they plan to invest in? Where do they see future growth? Is this the right owner to take the business to the next level?” 

To find out more about our Corporate and Commercial services, click here. To find out more about our services in the Retail sector, click here.

 

Danny Schwarz and Sophie Levitt discuss how the rise in NICs will affect property investors and landlords, in FT Adviser

Posted on: January 13th, 2025 by Natasha Cox

Head of Commercial Real Estate Danny Schwarz and Solicitor Sophie Levitt discuss how the increased rate of employer Class 1 national insurance contribution rates will impact property investors and landlords.

Danny and Sophie’s article was published in FT Adviser, 13 January 2025.

NIC Rate Hike: UK businesses brace for landlord and tenant turmoil

Rachel Reeves presented her Autumn Budget 2024 to Parliament on 30 October, to a mixed reception. One of the most controversial changes announced was that the government will be increasing the rate of employer Class 1 National Insurance Contribution (NIC) rates from 13.8% to 15%. The current rate of 13.8% is payable on the amount that an employee’s earnings exceed the secondary threshold of £9,000 per year/£175 per week. However, the increased rate will be 15% and the secondary threshold will be reduced to £96 pounds per week/£5,000 per year. These changes to employers NIC rates will come into effect on 5 April 2025, however are already posing concerns for the UK’s retail and hospitality sector.

While the increase in employer NICs aims to raise revenue for vital services, such as the NHS, and may increase funding for contributory benefits, such as the State Pension, the measure could have a profound effect on retail and hospitality businesses due to the increasing costs such businesses face and may result in shop closures, and others feeling the strain.

As a result of these changes, it is vital that property investors and landlords consider how these measures will impact their buying strategies, and tenants may well consider renegotiating their lease agreements to offset the higher operational costs which may otherwise impact their businesses.

For landlords and tenants alike, these reforms pose a number of challenges.

Operational costs

The prospect of raising employer National Insurance costs could prove to be a major setback for businesses. As a result of these reforms, businesses could be forced to face higher operational costs due to increased NICs, which would reduce their profit margins and place a greater strain on their livelihoods. For instance, it has been estimated that Tesco alone could face a £1 billion pound increase in its National Insurance bill over the course of this parliament.

Smaller and medium-sized enterprises (SMEs) are expected to be the most severely impacted as a result of these changes. SMEs often operate on tighter profit margins and many such businesses will therefore be forced to decide whether to fund the higher NICs by operating on reduced profits, cutting back on expenses or increasing their prices.

As a result, a phased introduction of the NIC threshold may be a better way for businesses to absorb the costs without passing them on to consumers in the form of higher prices.

Price increases

If a retail business opted to increase their prices of goods and services to offset the higher costs, consumer spending and demand could also be impacted as a result of the NIC hikes. Higher prices could exacerbate the cost-of-living crisis, making everyday items more expensive for shoppers.

It therefore comes as no surprise that more than 70 of Britain’s largest retailers have signed an open letter to warn the Chancellor that the NIC hike may lead to price increases and job losses throughout the high street. Some of the signatories included Aldi, Lidl, Boots, Ocado, Morrisons, Greggs and JD Sports – all of whom share concerns about the viability of such proposals.

Lease agreements

Business tenants who face the higher operational costs from the increased NIC rates may also seek to renegotiate their lease terms as a result of these changes. This could potentially lead to more flexible or reduced rent agreements since landlords are likely to be reluctant to lose longstanding tenants and will want to avoid being left with vacant properties and no rental income.

There are several ways for landlords to offer incentives and concessions to tenants to help them through this new financial burden. Temporary rent reductions could help tenants manage their cash flow during challenging times. Landlords could otherwise offer reduced rent for early renewal, waive certain fees or provide additional services such as maintenance.

Consequently, the terms of the lease could be made more manageable for tenants.

Rent arrears

Moreover, under the strain of these measures, certain landlords may also be less willing to renegotiate their lease terms and tenants may struggle to absorb the additional costs. Tenants, particularly in the retail and hospitality sectors, may be unable to generate enough income to meet their rent obligations. This could lead to higher rates of tenant defaults, leaving landlords with no choice but to forfeit their leases and to re-market the property. If landlords were left with no rental income, this would place a further strain on their finances.

There would also be additional expenses including administrative costs and legal fees when dealing with tenant defaults.

The fact that the British Retail Consortium is seeking a meeting with the Chancellor to discuss their concerns about the increased NIC rates, is proof that the scale of the new costs has the potential to cause severe financial hardship across different businesses.

Property transactions

The hike in NIC rates could affect the overall cost structure of property transactions and lead to higher property prices for buyers and sellers. Buyers may face higher purchase prices, which can affect affordability and demand in the property market. This could create a more challenging environment for property transactions, with reduced demand leading to slower market activity. 

If property investors and developers must operate on reduced profit margins, therefore, certain projects may seem less attractive or viable. This could lead to a decrease in the number of new development projects.

Higher NIC rates would also likely lead to increased labour costs for property investors and developers. This would inevitably make construction and development projects more expensive, potentially leading to higher prices for new properties.

Additionally, higher costs may be reflected by the fees of the professionals who are involved in the development projects, such as surveyors, architects and contractors.

Reduced investment

With increased costs due to higher NIC rates, landlords and tenants may also reduce investments in property improvements, expansions, or new technology, potentially slowing growth and innovation in the sector. The NIC rate hike has the potential to exacerbate economic uncertainty and make buyers, sellers and investors more cautious.

It is highly likely, therefore, that the changes will affect the overall health of the property market and have a significant knock on effect on the UK’s retail and hospitality sector.

Potential for legal disputes

Unsurprisingly, therefore, changes implemented as a result of the Budget could lead to legal disputes over lease agreements, employment terms and other obligations as parties adjust to the new financial landscape. There is also potential for businesses to struggle to comply with these new NIC regulations, which could lead to disputes with HMRC over unpaid contributions or penalties for non-compliance.

It is vital that businesses stay updated with the latest NIC regulations to ensure that they remain complaint. Payroll systems will need to be reviewed and updated to reflect the changes in the NIC rates. Compliance will reduce the risk of disputes arising from regulatory issues and will ensure a smoother operation of business.

Navigating the increased secondary NIC liability

As a result of Reeves’ proposals, the UK government estimates that 940,000 employers will face an increased secondary NIC liability. It is therefore inevitable that businesses across the UK and especially SMEs are feeling the pressure of this financial burden. It is essential for businesses to consider a variety of cost saving measures and to save price increases and redundancies as a last resort.

Landlords must also take a balanced approach and agree to renegotiate their lease agreements with loyal tenants if it is reasonable to do so. Landlords may be able to offer more flexible payment plans or allow temporary reductions with the agreement to recoup the difference at a future date.

However, maintaining open and transparent communication is fundamental.

Landlords and tenants should discuss the financial challengers together to find mutually beneficial solutions. By adopting this strategy, landlords can help their tenants through financial hardship whilst maintaining occupancy and fostering positive landlord-tenant relationships.

Looking ahead

Unsurprisingly, the proposed NIC hikes has provided cause for concern for many UK businesses in the retail and hospitality industry. From the impact on operational costs to the risk of litigation, there are a plethora of factors that must be considered if businesses are to weather the storm and remain both profitable and compliant.

In order to navigate these choppy waters, it is therefore vital that businesses seek tailored legal advice concerning their employment obligations and property agreements to ensure that they are braced for the upcoming changes and able to tackle the issues head on.

For more information on our Commercial Real Estate services, please click here. For our services in the Retail and Hospitality sector, click here