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.
Regent Street Apple Store, London
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.