Outrage in Germany as Adidas, H&M stop rent payments

Global retailers including Adidas and H&M sparked outrage in Germany on Sunday after announcing they planned to stop paying rent on stores that have been forced to close over the coronavirus outbreak.

Finance Minister Olaf Scholz urged leading companies to refrain from taking rash action that could hurt property owners.

“It’s irritating when large companies simply announce a halt on paying rent,” Scholz told the Bild daily, urging retailers to reach out to landlords to find solutions.

“Now is the time to work together,” he said.

The move comes after the German government unveiled a major rescue package to protect companies and jobs from the economic impact of the pandemic.

It includes a provision that temporarily shields tenants from being kicked out of their homes or business premises if they experience financial hardship over the coronavirus measures.

But Justice Minister Christine Lambrecht warned company bosses not to take advantage of the measure.

“It is indecent and unacceptable if financially strong firms now just stop paying their rents,” she said in Berlin on Saturday.

German sportswear maker Adidas, which made a net profit of nearly two billion euros ($2.2 billion) in 2019, has been hard hit by a slump in Chinese sales and massive store closures.

The company, one of Germany’s best-known brands, told DPA news agency that it was “temporarily suspending rental payments, just like many other companies”.

German Transport Minister Andreas Scheuer said he was “disappointed by Adidas”, pointing out that many small landlords would be left out of pocket.

German MEP Katarina Barley tweeted that she had bought her last pair of Adidas trainers, in a post that received over 9,000 likes.

But the Bavarian giant hit back, with CEO Kasper Rorsted telling the Monday edition of the Frankfurter Allgemeine daily that the bulk of Adidas’s German landlords were “large real estate companies and insurance firms” who had “mostly shown understanding” for the rent freeze decision.

Adidas would continue to make payments to small private landlords, he said. “They will receive their April rent as usual.”

Growing list

Swedish clothing giant H&M likewise said it would not be paying rent on its roughly 460 closed stores in Germany, telling DPA that it had informed landlords and hoped to find “a mutually acceptable solution” soon.

German shoe store chain Deichmann intends to suspend rent and service charges from April for the duration of the government-ordered closures.

A spokesman for the Essen-based company told DPA that it expected those with political responsibility “to compensate for the lost rental income of the affected parties”.

Other German media outlets reported that electronics retailers Saturn and MediaMarkt as well as Adidas rival Puma also planned to halt their rent payments for now.

The Ceconomy group that owns Saturn and MediaMarkt said Sunday that it intended to apply for state aid to weather the coronavirus crisis.