Mall owner sues Gap for rent on coronavirus-shuttered stores

Marco Green
June 6, 2020

USA clothing retailer Gap has reported a quarterly loss of nearly $1bn, after it had to close the vast majority of its stores worldwide during the coronavirus shutdown.

The clothing retailer's posted a $932m (£738m) loss for three months to May 2, compared with a profit of $227m for the same period past year.

It comes as Gap wrote off the value of the goods it holds by more than a quarter of a billion dollars.

The firm's shares were down by more than 8% in after-hours trade.

Retailers of non-essential goods, such as clothing, have been significantly affected by store closures across many territories, which were created to slow the spread of Covid-19.

The court battle highlights the mounting tension between retail landlords and their tenants, many of which had stores forced shut due to the crisis and as a result stopped paying rent or paid less rent.

The biggest mall owner in the country Simon Property Group is suing one of its biggest tenants, Gap, for failing to pay more than $65.9 million in rent and other charges due during the coronavirus pandemic, according to a lawsuit filed Tuesday in DE state court.

San Francisco-based Gap did not respond to a request for comment Thursday.

Simon, per the lawsuit filed earlier this week, is asking the court to order Gap to pay up to $66 million, in addition to future rent payments. While online sales improved for Old Navy and Athleta, they fell for Banana Republic and Gap, underscoring weakness at the brands that pre-dates the economic upheaval following the lockdown.

Gap, like other clothing stores, is hurting after temporarily closing its doors in March as the virus spread. "We continue to plan conservatively as significant uncertainty remains ahead", Katrina O'Connell, CFO at Gap, said in a statement.

"It's very hard to say how long it will take, but I do know that one of our primary objectives is to use this opportunity to partner with our landlords to come up with a better profitability for the company".

Other reports by Click Lancashire

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