Gap Inc. Has Stopped Paying Rent And Likely Needs To Find More Money Within The Next 12 Months To Stay Operational

TOPLINE

San Francisco-based apparel retailer Gap Inc. is running out of money, isn’t paying rent and warned it likely needs to find more cash within the next 12 months in order to fund operations—joining other large apparel retailers experiencing dire financial uncertainty as stores across the country remain closed.

KEY FACTS

Crucial quote

 “We will need to take additional actions to both preserve existing liquidity and seek additional sources of liquidity, beyond our currently available cash and credit facilities, within the next 12 months as existing cash and cash expected to be generated from operations may not be sufficient to fund our operations,” the filing reads.

news peg

The amount of money customers are spending on retail has fallen below levels seen during the 2008 Great Recession. Retail spending dropped 8.7% in March, beating the previous record of 3.9% in 2008.

key background

Other large retailers are on the brink of financial disaster. Tenants with properties nationwide only paid 53% of their rent costs so far in April, according to The RealDeal, citing a report from Datex Property Solutions, compared to 87% by this time last month. Foot Locker
FL
, H&M, Nordstrom
JWN
and LOFT also haven’t paid rent in April so far while others haven’t paid interest on their bond payments, including J.C. Penney and Neiman Marcus, the Wall Street Journal reported.

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