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Adidas under fire for holding back rent payments because of coronavirus

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Via Financial Times

German politicians have rounded on Adidas after the sportswear group made use of the government’s emergency response to the Covid-19 crisis by holding back rent payments on its shops.

Olaf Scholz, the German finance minister, told the Bild newspaper on Sunday that it was “irritating when big companies simply announce a halt to rental payments”.

“Now is the time for co-operation . . . We will only get through this crisis together if we show consideration and cohesion. Corona teaches us that we will fail if we show egoism,” he added

Katarina Barley, a prominent Social Democrat politician who currently serves as vice-president of the European Parliament, said she would boycott Adidas products. In a Twitter post that showed her wearing a pair of Adidas sneakers, she said: “Those are the last Adidas that we bought. For a global group with 3.2bn profits in 2019 to exploit protection clauses for tenants with existential problems is shabby.” 

The political backlash came after Adidas said on Friday that it was freezing rent payments in response to the crisis: “Adidas, like many other companies, has temporarily suspended rental payments where our shops are closed,” a spokeswoman said on Sunday.

She added: “It is important to note: this is not about not paying the rent for April. This is only about a deferral…Our landlords, who are mostly large property companies and insurance funds, have mostly shown understanding for this measure. Private landlords are exempted from the deferral, and have received the April rent as usual.”

Fashion retailers H&M and Kik made similar announcements, as did electronics retailer Ceconomy and Deichmann, Europe’s biggest shoe retailer. 

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The legal base for their move is contained in the package of laws and measures passed by the German parliament last week to cushion the economic blow from the Covid-19 crisis.

They include a change to tenancy laws that bans landlords from evicting tenants if they fail to pay their rents between April 1 and June 30 2020. Tenants have until June 30 2022 to catch up on the missed payments.

The provision does not specifically exclude large or listed companies, but government officials have made clear that it was not intended for the likes of Adidas.

Christine Lambrecht, the German justice minister, said on Saturday: “It is indecent and unacceptable for financially strong companies to stop paying their rents . . . Tenants must obviously pay their rents.”

The relief offered by the legal change was intended only for tenants that were suffering “serious difficulty to make payments as a result of the crisis”, she added.

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