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Business Observer Friday, Apr. 24, 2020 3 months ago

Retailer tells landlords it will suspend rent payments

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The Gap Inc. has six flagship locations on the west coast of Florida.  

The Gap clothing chain, in a public filing, has given notice that it will suspend rent payments for all its stores — including six locations in the region, from Fort Myers to Tampa. The prominent retailer also operates the Banana Republic and Old Navy brands, with 15 additional locations in the region. 

“We are facing a period of uncertainty regarding the ongoing impact of the COVID-19 pandemic on both our projected customer demand and supply chain,” the company says in the filing. “At this time, many of our company-owned and franchise stores globally have had to close or are operating with reduced store hours due to COVID-19 mitigation efforts.”

The company says it will stop paying rent as of April, saving about $115 million per month for its North America locations. (It didn’t specify in the filing if the rent suspensions include brands other than the Gap.) “We are currently negotiating with the counterparties under those leases to defer or abate the applicable rent during the store closure period, to modify the terms (including rent) of our leases going forward after the stores reopen, or in certain instances to terminate the leases and permanently close some of the stores,” the company states in the filing.

The Gap locations in the region impacted by the rent payment suspensions include:

Ellenton, north Manatee County in the Ellenton Premium Outlets, owned by Simon;

Estero, Lee County, in the Miromar Outlets owned by Miromar Development Corp.;

Fort Myers, Sanibel Tanger Outlets, owned by Dahlmann Properties;

Lutz, Tampa Premium Outlets, owned by Simon;

Sarasota, Mall at University Town Center, owned by Taubman Centers

Tampa, International Plaza, owned by Taubman Centers

The San Francisco-based company, which did $16.38 billion in sales in 2019, announced several other steps its taking amid the pandemic, including:

• Suspending stock repurchases;

• Reducing planned capital expenditures by approximately $300 million in fiscal 2020;

• Reviewing all operating expenses for opportunities to reduce spending;

• Furloughing the majority of our store teams in the United States and Canada, pausing pay but continuing to offer applicable benefits until stores are able to reopen;

• Reducing headcount across corporate functions; and

• Temporarily reducing pay for the entire Gap Inc. leadership team along with the board. 

 

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