Despite pulling in record earnings last quarter, Apple reportedly asked the landlords of its U.K. retail outlets to cut their rent by a massive 50%, The Sunday Times reports.
The newspaper says Apple is also asking for a “rent-free period” as the COVID-19 pandemic plays out. In return, the company says it will extend its leases for a lengthy period — although some of the stores in question have several years left on their lease agreements.
Unsurprisingly, Apple’s suggestion has caused “consternation” among building owners.
Apple’s argument is that it brings the company in line with other U.K. retailers that received favorable agreements during the coronavirus pandemic. As COVID-19 has hurt high streets, many of which were already struggling, some stores have received lower rents for a period.
Asking landlords for rent cuts: To do or not to do?
If the report’s accurate, it’s easy to see why Apple made the demand. But it’s not good on the level of optics. Apple has certainly not been immune to the economic impacts of COVID-19. Apple stores around the world were closed for many weeks earlier this year. During that time, Apple lost out on plenty of sales. Some of its retail shops are located in very expensive areas, meaning that Apple is paying high rent for receipts far below usual. Apple is also such a successful company exactly because it displays this kind of ruthless efficiency, whether it’s dealing with the tax system or negotiating favorable prices from suppliers.
At the same time, the situation could easily be read as profiting from the current pandemic. For all the genuinely good work Apple has done to help during COVID-19, it would be a shame if this was how the public perceived its behavior during this time.
Source: The Sunday Times