Ailing retailer Nordstrom (NYSE:JWN) has told its landlords it will only pay half the rent they're due for the rest of 2020 and will use comparable-store sales to determine whether it will "true-up" payments. The letter to landlords was obtained by industry site Retail Dive.
The department store chain runs the risk of being sued as mall operators are vigorously pushing back on the rent strike many of their tenants have launched.
Setting itself up for a lawsuit
Nordstrom had been struggling to turn around its operations even before the coronavirus pandemic blew up those plans, suffering falling sales at both its full-price namesake stores and its off-price Rack stores.
The letter from Nordstrom's president of stores, Jamie Nordstrom, to its landlords said it would only pay half of its occupancy costs for the remainder of the year, but that comps at a particular store will be be used to determine a "true up rent payment, up to a full reconciliation should 2020 sales reach 90% of sales made in that location in 2019."
Mall operators Brookfield Property Partners (NASDAQ:BPY) and Simon Property Group (NYSE:SPG) are both separately suing Gap (NYSE:GPS) over the rent strike it went on. Simon is looking to recover $65.9 million while Brookfield is seeking over $2 million.
Nordstrom is hemorrhaging money and reportedly fired 6,000 workers last month in a bid to conserve cash, and announced in May it was permanently closing 16 full-price stores.
The retailer did tell the landlords, though, it would continue to maintain the properties as required, while also paying for insurance and utilities.