A nearly 90-year-old French sportswear label is calling the game for its American retail business.
Earlier this month, Lacoste USA’s chief financial officer Karine Sansot-Vincent sent a letter to its landlords announcing that it would seek to renegotiate leases as reducing costs would be “vital” to its “ability to be a viable company in the future.”
The letter, seen by The Real Deal, notes that the company has retained restructuring counsel at law firm Arent Fox and real estate advisory firm Keen-Summit Capital Partners to lead the restructuring of its leases with landlords across the country.
The sporty designer label has at least 80 stores in the U.S., including 575 Madison Avenue, 541 Broadway and Westfield World Trade Center in Manhattan. The retailer has a handful of stores in Southern Florida, including the Dadeland Mall in Miami and on Lincoln Road in Miami Beach. The company, which is privately held, said its revenues in 2018 were $2.23 billion, the New York Times reported.
Sansot-Vincent noted in the letter that Lacoste’s U.S. stores have been forced to shutter due to Covid-19 and are generating “no revenue whatsoever” in addition to a “material decline” in profitability and negative cash flows.
“The existing retail business model is no longer sustainable,” wrote Sansot-Vincent. “The essential purpose of our retail leases has been totally frustrated.”
The retailer did not respond to requests for comment.
Lacoste is far from the only retailer struggling amid the pandemic. More than one in five national retail chains aren’t paying billed rent and April rent collection fell to just 58 percent from 96 percent last year.
Luxury department store Neiman Marcus filed for bankruptcy early this month citing “unprecedented disruption caused by the COVID-19 pandemic.”
Brendan Wallace, managing partner and co-founder of Fifth Wall Ventures, is calling for a $30 billion government bailout of the retail industry to stave off system collapse. Meanwhile, landlords, such as Related Companies, are demanding that tenants with the means to pay rent do so.
Write to Erin Hudson at [email protected]