Sun, 28th Jul 2019
Fast fashion retailer Primark is pushing landlords for rent cuts on shops that are due to renew their leases, as rivals look for rent cuts via insolvency deals.
Primark is seeking rent cuts in a bid to bring its costs down in line with its main rivals, who have made use of insolvency proceedings in order to cut deals with landlords. Competitors such as Arcadia, and Monsoon have negotiated rent cuts through company voluntary arrangements. These deals have become popular among bricks and mortar retailers that have been struggling with high costs as online shopping has become more popular.
Primark is seeking rent reductions of up to 30% from its main landlords, after rivals such as Next managed to cut rates by 29% for leases at 28 of their stores last year.
A spokesman for Primark explained that when leases were coming to an end they were looking for new agreements which reflected the current market rate for the type of property in question. At the moment, this means that they are seeking reductions, because the current rate is lower than the rate that had been agreed at the start of the lease. They added that as a responsible retailer they have a duty to their shareholders to ensure that their cost base remains competitive.
Primark currently has 189 stores, and it is unclear how many of them are likely to have a chance at securing a rate cut. The retailer is thought to be offering to sign on to longer leases, or to invest in refurbishments that could improve the value of the company.