#Huge mall deal collapses as coronavirus cripples retail
“#Huge mall deal collapses as coronavirus cripples retail”
June 10, 2020 | 1:35pm
It is the second major retail deal signed before the virus hit the US to crumble. The sale of Victoria’s Secret to a private equity group fell apart last month.
Simon Property Group announced it would buy Taubman in early February, just weeks before the Centers for Disease Control and Prevention announced that a California man was being treated for coronavirus, the first known case in the US. In March, clothing stores and malls were ordered to close.
The plunge in sales for retailers since then has been unprecedented, particularly for those with a heavy presence in malls. JCPenney, Neiman Marcus and J.Crew, have all filed for bankruptcy protection this year.
Victoria’s Secret moved aggressively into malls at the direction of its parent company’s founder Les Wexner, who wanted to push lingerie into the mainstream.
Malls have struggled for years as shopping moved online and consumers grew tired of them. Their plight even inspired a haunting YouTube channel called the Dead Mall Series.
The coronavirus has delivered a devastating blow to those that remain and also stores with a big mall footprint.
In malls that have reopened, drinking fountains are disabled or taped off, play areas for kids are closed, and sitting in a food court is done at a distance from other humans.
Retail consultant Jan Rogers Kniffen believes that half of the 1,000 malls in the US will either close or be unrecognizable in two years. Before the pandemic, he expected only 300 to close, and that decline would take place over a decade.
The pandemic has accelerated that timeline. CBL, a Chattanooga, Tenn., mall operator with 108 properties, warned this month that it may fail.
On Wednesday, shares of any retail chain with stores in malls plummeted. Kohl’s, Macy’s, The Gap and Abercrombie & Fitch all slumped sharply.
Simon said on Wednesday that Taubman has been “disproportionately” affected by the COVID-19 pandemic because many of its properties are indoors, have high-end stores and are in or near big cities.
Taubman Centers, headquartered in Bloomfield Hills, Mich., did not respond to a request for comment Wednesday.
Simon, based in Indianapolis, owns or has a stake in more than 200 properties in the US as of last year. Taubman Centers owns, manages or leases 26 shopping centers in the US and Asia, including The Mall at Short Hills in New Jersey, and Waterside Shops in Naples, Fla.
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