High street beauty retailer Superdrug is slashing three quarters of its rent payments, despite keeping stores open during the coronavirus pandemic.
In a letter to its landlords, as reported by the Financial Times, the A.S. Watson-owned chain said it intends to reduce its lease payments to 25% starting from the next due date for a minimum of three months.
Companies are able to do this because evictions have been banned for three months through to mid-June, as part of government commercial tenancy measures enforced due to the Covid-19 crisis.
The letter is said to have stated: “For the avoidance of doubt, this is a rent reduction as opposed to a rent deferment”.
In a statement to Cosmetics Business Superdrug said: "Throughout this period of Covid-19 lockdown, we have continued to incur the full costs of our store estate and we have paid our second quarter rent and service charges in full taking us up until the end of June 2020.
"We have, however, temporarily closed approximately a third of our store estate, focusing on keeping pharmacies open, as well as stores that are critical to supporting communities.
"Stores that remain open have experienced an unprecedented decline in footfall and sales volumes and are operating with reduced trading hours.
"We have long-standing partnerships with many of our landlords and so we are now seeking rent reductions across our store estate. We have given a full 2 months notice to ensure both parties can continue to grow post the Covid-19 pandemic."
The beauty retailer is one of many chains on the high street that have found themselves in financial difficulty since the UK government ordered nonessential shops to close last month.
Department store chain Debenhams applied for ‘light administration’ in April and will not reopen seven UK stores one the lockdown is lifted.
Meanwhile, discussions are said to be underway at John Lewis about which stores should remain permanently closed post-lockdown.
However, Boots, Superdrug’s main rival, is facing legal action from landlords after refusing to pay the full price of its rent.
A.S. Watson, which is controlled by global conglomerate CK Hutchison reported US$56bn in total revenue for 2019.
Superdrug has been contacted for comment.
