Saks faces eviction in Miami over US$1.9m in unpaid rent

[MIAMI] An upscale Miami-area shopping mall is moving to evict Saks Fifth Avenue, saying the retailer hasn't paid rent since March 16 and owes about US$1.9 million.

Saks told its landlord, Bal Harbour Shops, this month that it couldn't make lease payments on its three-level retail store due to the effects of the Covid-19 pandemic, according to a lawsuit filed in state court.

But the mall owner said Saks is open and was still generating revenue even when non-essential businesses were closed to in-store customers. Bal Harbour said the store generated more revenue in June 2020 than it did in the same month the previous year.

Saks Fifth Avenue, owned by Canadian parent Hudson's Bay, is among a broad group of businesses that have been bludgeoned by economic lockdowns and a rapid change of consumer tendencies amid the global pandemic. Non-essential retailers such as department stores and fashion-focused chains saw sales plunge precipitously earlier this year during mandatory closures. Nordstrom, for example, reported Tuesday that it had only half of the sales in the second quarter of 2020 that it had a year earlier.

In a statement, Saks Fifth Avenue said the owners of Bal Harbour "have not acted in good faith", unlike "the majority of our landlord partners". "Not only have they chosen not to adequately assume their fair share of the damages created by the global health crisis still gripping our nation, they have used the press and legal system to bully tenants," the company said. "They are upset that Saks Fifth Avenue has not succumbed to their bullying and are continuing to inflict damage to our business and reputation with these actions."

Overall, the pandemic has accelerated pre-existing trends in retail, such as consumers' migration to e-commerce. Department stores that have filed for bankruptcy this year include JC Penney Cos and Neiman Marcus Group. Lord & Taylor, a former Hudson's Bay brand that had been sold to Le Tote, has also started bankruptcy proceedings this year.

Bal Harbour Shops has been considered a well-performing luxury mall with a strong set of high-end tenants, though retail woes were approaching its doorstep even before Covid-19 devastated the industry. Plans to open a Barneys New York store in a new wing were scrapped last year when the retailer went bankrupt and liquidated. Retailers in the Miami metropolitan area depend to a significant degree on tourism, which has slowed dramatically during the pandemic.

BLOOMBERG