Gap in landlords battle as it seeks lease changes ahead of online-only move
Gap is facing a fight with landlords over its plans to exit physical retail in the UK (and in mainland Europe). These plans should see it closing all of its UK and Ireland stores in July.
Property sources told The Times that the company had offered to pay rent until July but only at a reduced rate. That would be a major problem for landlords that are currently faced with historically slow rent collections and many tenants either refusing to pay rent or wanting to switch to turnover-based deals.
The newspaper went as far as to say that the company is "at war with its landlords", which suggests that property companies are less than willing to play ball with the retailer’s plans.
News emerged last autumn that the American retail giant is exploring the option of being an online-only business in Europe, although there were also suggestions that franchise deals might be struck for stores.
Whether that means the company would maintain any of its existing stores or start from scratch with new franchisees is unclear. It's known that one of the shops it has on Europe's premier shopping street, Oxford Street, is already on the market.
Gap currently operates 95 shops in the UK, although these are closed because of the current lockdown. In the year to the beginning of February 2020, the company recorded more than £3 million in impairment charges for shops that were underperforming, which makes it clear that the company’s problems aren't only linked to the pandemic.
Its UK retail sales fell by almost 10% to just over £195 million in that financial year and its operating losses were more than £40 million.
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