In this economy, retail companies are working diligently to cut costs. At the same time, though, the owners of shopping centers want to maximize their incomes in the face of lost revenue from the thousands of store closings taking place this year.
It looks like the retailers might be winning that battle now, though. Two major chains, Pier 1 Imports (PIR) and Rite Aid (RAD), announced during their quarterly conference calls that they are getting rent reductions in their negotiations with landlords.
In the case of Pier 1, the chain will get rent reductions that executives say are saving the company $38 million over the next few years. The good news for landlords is that the concessions will reduce the number of store closings by the chain, from 50 to 40 locations in its next fiscal year.
Rite Aid's management said it recieved rent relief on 20 percent of its stores. That probably isn't a bad thing, considering that the company lost just under $84 million in its latest quarter. The drugstore chain also closed 14 stores, more than it opened, in the quarter.
These aren't the only retailers working on reductions. In its third-quarter conference call, shoe vendor The Finish Line (FINL) also said that it's working with landlords on rents. And earlier this year Starbucks (SBUX) said it was sucessful.
All of this is in contrast to what major shopping-center owners told investors earlier this year. Developers Diversified Realty (DDR), one of the country's largest operators with nearly 700 assets, said there were only 20 instances in which it needed to give concessions.
With this new news of retailers' supposed success in winning negotiations, we'll see if things change. Many of the publicly traded owners of malls and other shopping centers will report their latest results in January, and their numbers should provide more insight into the state of lease of lease renegotiations.