Gap Inc. Sued by NYC Landlord Over $530K in Missed Rent Payments
The Gap Inc. has been hit with a lawsuit by a New York City landlord over failure to make rent payments.
On Monday, 48th Americas LLC. filed a complaint against the San Francisco-based retailer in New York district court — alleging that Gap violated its leasing agreement by failing to make fixed and other rent payments, totaling $530,334.39. The filing says Gap missed two monthly rent payments of $264,190, as well as water and snow removal charges. The landlord is seeking monetary relief for the skipped payments as well as at least $20,000 to cover attorneys’ fees.
Two weeks ago, Gap Inc. said it had skipped out on April rent payments for its North America units, which total roughly $115 million. The apparel and accessories chain added that it was negotiating with landlords to defer or abate rent as stores remain closed — or even to terminate leases and permanently shutter some outposts. As a result of stores being shut since mid-March, the majority of the company’s employees in the U.S. and Canada have been furloughed. In addition, the company has reduced headcount across its corporate functions and reduced take-home pay for its entire leadership team and board of directors.
What’s more, Gap Inc. cautioned that it might not have enough cash to fund operations through the end of 2020. The retailer informed the Securities and Exchange Commission in April that it expected to have between $750 million and $850 million in cash and equivalents at the end of the fiscal quarter on May 2. (As of Feb. 1, the company had $1.7 billion.) The corporation said it would have to seek additional sources of liquidity, including a combination of new debt financing or other short-term credit facility, in order to continue operations.
This week, Gap Inc. announced plans to reopen 800 of its outposts this month, including its namesake units as well as stores under the Old Navy, Banana Republic, Janie and Jack, Athleta and Intermix banners. Outposts in Texas will begin to open starting this weekend. As stores reopen, they will be outfitted with hand-sanitizing stations, plexiglass barriers at registers and signage encouraging social distancing. Additionally, fitting rooms and restrooms will be closed, and shoppers will be advised to use mobile payment or other contactless options.
Gap is one of several brick-and-mortar fashion retailers that announced they would not pay rent during coronavirus-induced store closures. Urban Outfitters Inc., parent to its namesake brand as well as Free People and Anthropologie, announced in late March that it would not pay rent on a temporary basis and would also defer or cancel planned store openings for the year. Victoria’s Secret parent L Brands Inc. also said it would not pay rent while doors stay closed. And a lawsuit filed against Ross Stores Inc. this week alleges that the off-pricer skipped out on $5.5 million in rent payments for three of its Florida stores.
Gap Inc. did not respond to FN’s request for comment.