According to Retail Dive, Nordstrom Department Store president, Jamie Nordstrom, informed its landlords that Nordstrom will restructure its lease payments by 50% for the remainder of 2020. The Nordstrom decision was reported in this article updated July 10, 2020.
Why is this Important to My Business?
There are many reports that major companies are restructuring lease payments in 2020. But few news articles reveal the actual amount that rents are being reduced. Therefore, the revelation that Nordstrom will restructure its lease payments fully by half is a useful measuring stick to all companies who need to restructure their own lease payments.
Will Nordstrom Fully Perform its Lease Covenants?
Mr. Nordstrom also reaffirmed in his letter to landlords that the department store will abide by its lease covenants, including payment of utilities, building maintenance and insurance coverage.
Again, this is an important measuring stick for other companies; lease payments may be negotiable, but lease covenants may be much harder to eliminate or reduce. So companies should plan to continue paying utilities, insurance and maintenance necessary to keep a business operation fully functional.
What Other Cuts is Nordstrom Making?
As widely reported in news outlets, Nordstrom will also permanently close 16 stores and lay off employees at those stores. In addition, the department store will cut up to 25% of its workforce, nationwide.
According to Mr. Nordstrom, the company plans to make up the balance of its unpaid lease payments starting in January 2021.
We Can Help
We assist businesses in restructuring their obligations, including commercial lease obligations. If we can help your business with this process, please give a call: (213) 600-6077–ask for Kevin McBride.