Nordstrom is the latest retail tenant to find itself at odds with its landlords. The upscale department store chain has reportedly notified the property owners of its namesake and off-price Rack stores that it will pay only half of its rent costs for the rest of 2020. A letter from President of Stores Jamie Nordstrom to landlords on Friday showed that the company would use comps as the basis for its decision to make its rent payments. The report suggested that Nordstrom would pay “up to a full reconciliation should 2020 sales reach 90 percent of sales made in that location in 2019.”
Total Retail's Take: This is the latest step taken by Nordstrom to cut costs and preserve cash flow. The department store last month announced a significant workforce reduction (The Seattle Times reported that 6,000 jobs had been cut), as well as plans to shutter 16 full-line store locations. Negotiating with its landlords on a reduced rent payment isn't likely to happen without a fight, however. Both Simon Property Group (the biggest mall owner in the country) and Brookfield Property Partners have sued Gap Inc. over missed rent payments, and the precedent is being set that mall landlords are unwilling to renegotiate payment terms. I would expect that Nordstrom is going to face similar challenges to its payment plan.