SAN FRANCISCO – US apparel retailer Gap has taken drastic measures to ease cashflow issues as the impacts of Covid-19 bite hard. The company has suspended rent payments under the leases for its closed stores in North America, which amount to around US$115m per month. Gap has said it is now negotiating to defer or abate its applicable rent during the store closure period and modify the lease terms going forward. Gap admitted that it runs the risk of being found in default, and says it is also suspending all share buybacks.
Gap has made clear that it may not have enough funds to run its operations in the next 12 months as it manages the severe impact of the coronavirus pandemic. The problem the business has is that stores across the globe are closed, while online sales are also being hit as people are concerned about their jobs and deferring spending.
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