By Esther Fung
Simon Property Group, the country's largest mall owner, filed a lawsuit against Gap Inc. on Tuesday over unpaid rent and other charges it says amount to $66 million.
In the filing, Simon Property said the retailer has withheld rent for April, May and June. The landlord is seeking to be paid rent for those months, as well as attorney fees and other charges, according to the lawsuit.
"The requirement that The Gap Entities timely pay rent due under the leases has not been excused," said the complaint, which was filed in the Superior Court of the state of Delaware.
Gap didn't comment on the lawsuit directly, but said it is committed to working with landlords on "mutually agreeable solutions and fair rent terms."
"It's important to note the profound effect that Covid has had on shopping centers as well, leaving them closed to us and our customers for months," said Mark Daniel Snyder, communications manager at Gap.
Gap spoke generally about its landlords on its first-quarter earnings call Thursday, but didn't mention Simon by name. "We're just knee deep with all the landlords today," Chief Financial Officer Katrina O'Connell said. "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 out with a better profitability for the company."
Gap said in April that its stores are closed because of the coronavirus pandemic and it had stopped paying rent because of insufficient cash flow. The San Francisco-based retailer, which owns brands such as Old Navy, Banana Republic and Athleta, added at that time that it was looking to renegotiate leases with its landlords.
At the end of the first quarter, Simon Property, based in Indianapolis, had 412 stores operated by the Gap in its properties, making Gap one of its top U.S. store tenants apart from department stores.
Simon Property didn't respond to requests for comment.
Gap reported a $932 million loss for the first quarter that ended in May. Results were hurt by hundreds of millions in impairment charges. Gap's net sales fell 43%, but the company said that online sales were up 13%, fueled by Athleta and Old Navy.
Gap has more than 1,500 locations in North America open, Chief Executive and President Sonia Syngal said in prepared remarks, which she said was "ahead of plan." She said the company expects "to have the vast majority of our North American stores reopened in June."
Allison Prang contributed to this article.
Write to Esther Fung at email@example.com