Malcolm Owen
Apple has made a request to landlords in the United Kingdom to cut the amount of rent it pays by half and to offer a free rental period, a report claims, with Apple supposedly offering to extend its leases for those who take up its offer.
Apple's physical retail outlets in the UK were shut for a number of months due to the COVID-19 pandemic, with all 32 stores in England only being back in service in the country from June 15. The impact of the coronavirus lockdown and social distancing measures has led to Apple attempting to regain some of its lost retail profits, which it is seemingly doing by reducing one of its main store costs.
According to The Times, Apple has been in contact with a number of landlords it deals with for its 38 retail outlets across the country, requesting some changes to their lease agreements in light of the COVID-19 closures.
The changes are said to include a cut in its rent payments of up to 50%, as well as a period of time where it doesn't have to pay rent to the landlords. In exchange for agreeing to the changes, Apple is preparing to extend the leases it has with the landlords for a few more years.
While seemingly a bold move for Apple, the attempt also has the potential to bring it in line with other retailers who are benefiting from low rents, offered by landlords keen to keep shopping centers fully occupied. Landlords also benefit from Apple beyond paying high rents, as the presence of the Apple Store does help increase foot traffic from consumers in the area, which helps sales for other retailers.
It is believed Apple's offer is being provided to landlords in cases where stores have several years left to run on leases, and that landlords are not obligated to make a decision anytime soon.
The request has caused some friction with land owners, however, as Apple's latest quarterly results revealed an 11-percent revenue jump to $59.7 billion. In July, filings in the United Kingdom revealed Apple earned $1.8 billion in revenue in annual sales, but the company only paid $8 million in tax.
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46 Comments
Rent is being cut for companies that are struggling and likely to go under without a cut, clothing stores, grocery stores etc. Apple isn't going to go under: they just reported record revenue while a lot of high street names are making heavy losses (and still paying more than Apple in tax). Even some malls are financially struggling, there's no way they can afford a 50% cut.
Apple's morals really seem to be in the gutter lately. This is a case of the big guy bullying the little guy. Several companies didn't take the government's furlough subsidy and paid employees out of their own pockets, but from what I've read Apple took the government subsidy despite being barely affected by the lockdowns. For a company I've supported for 25 years, this kind of thing is a big kick in the teeth and incredibly disappointing to read.
Torn on this one. As a share holder I say right one Apple. Pressure them to the lowest point you can get them.
Yet as someone tired of all the virtue signaling Apple has done over the last 10 years or so I say pay up. These building owners and landlords have families and mouths to feed just as you do.