Home / Business / Solomon Lew pulls out big guns in stand-off with retail landlords

Solomon Lew pulls out big guns in stand-off with retail landlords

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He is not alone in the fight against the landlords, but he is certainly the most vocal. For two years Premier has been posting an audit of the stores it has closed as a result of landlords refusing to lower rents.

Myer and David Jones have also been cutting back space and store numbers as their leases expired.

Over the past couple of years, other smaller retail chains have even placed themselves in voluntary administration, in part, as a means to cut a better deal with landlords.

Clearly the coronavirus pandemic that is devastating the discretionary retail sector worldwide is a major setback for all and will lead to the permanent closure of some chains.

But for those, like Premier, that are more likely to survive, it could prove a tipping point.

It is not the only owner of retail chains to shutter shops.

Accent Group, which owns a number of footwear brands including Athlete’s Foot, Skechers, Timberlands and Platypus, will also shut its stores for four weeks.

Accessories retailer Lovisa will close almost all of its 400 stores across the globe, while travel agents are mothballing some retail locations.

Mosaic, whose brands include Noni B, Millers and Katies, has closed its doors and Michael Hill has shut its jewellery stores.

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But none of these companies have dictated their own rent holiday, at least not yet.

Premier’s move could prompt an avalanche, if other large retailers, which for the past couple of weeks kept their doors open despite the near-absence of shoppers, follow suit.

Large shopping centre landlords could be faced with a conga line of retail chains following Lew’s lead.

Smaller retail tenants will be given some relief as the government moves to impose a short-term moratorium on rents.

Lew’s self-imposed rent holiday will either get the landlords to the negotiating table or their lawyers to the courts.

Premier’s brands (Smiggle, Portmans JayJays, Peter Alexander, Just Jeans, Jacqui E and Dotti) together with Lew’s family-owned retail chains (French Connection, Seed and NineWest), make Lew the country’s biggest retail tenant.

The loss of rent from his actions will punch a hole in the revenue of large REITs, such as Vicinity and Scentre, both of which suffered share price falls on Thursday as the broader market lifted.

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If others follow Premier’s lead that hole will get a lot larger.

But Lew’s ballsy call on rent could also attract plenty of criticism.

Premier’s financial performance over the past few years has made it one of the most successful and robust companies among its peers.

It has around $200 million in cash and minimal debt and is thus better able to withstand the pandemic.

By the time the industry returns to normal, there is no doubt a number of Premier’s competitors will no longer exist.

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