Two of SA wealthiest retailers have been the first to ‘go rogue’ on their rental obligations. A Moneyweb report says Edcon, the perennial patient, was expected to alert its long-suffering landlords that its already considerably trimmed-back rental obligations were likely to be an early victim of the Covid-19 lockdown, but for H&M and The Foschini Group (TFG) to lead the field of non-payers of rent was unexpected.

One analyst said the same logic will surely help to justify non-payment by the millions of credit customers of the big retailers. ‘The move opens up a Pandora’s box that could have long-term ramifications for the entire sector,’ says Sasfin analyst Alec Abraham.

And a lawyer reportedly told Moneyweb it will be very difficult for retailers to enforce payment by their credit customers before a judge if the retailers themselves have refused to pay their debts.

H&M, which not only has a prominent position in SA malls but is one of the world’s wealthiest and most powerful clothing retailers, informed landlords across the globe that it won’t be paying rent for the duration of the lockdowns.

Similarly, TFG has unilaterally decided it will not be paying any rent due at the end of April because of the lockdown. The retailer said it sought legal advice before deciding to suspend payment.

‘The decision was not taken lightly and has been guided by legal counsel,’ says TFG head of property Brad Rothenburg.

Abraham describes the decision as ‘very, very irresponsible’ and believes it will have a cascading impact throughout the retail chain. He believes that although trading has been difficult this year, most of the retailers, with the exception of Edcon, should be able to handle a few weeks of lockdown.

Full Moneyweb report