Hudson's Bay claims that the Galeries de la Capitale and Promenades Gatineau are no longer "first-class" shopping centers that live up to their obligations. Therefore, the retailer has the right not to pay all of his rent, Chairman and CEO Ian Putnam said in an affidavit.
Posted Oct 15, 2020 at 7:00 am
Asked for $ 2.3 million by the Oxford company, manager of the Galeries de la Capitale and Promenades Gatineau, Hudson & # 39; s Bay (HBC) replied. The shopkeeper, who has never denied that he has not paid his rent since April, has filed affidavits with the Superior Court to defend his case. The press has obtained them.
"Their willingness for HBC to pay the full rent ignores the fundamental change in the nature of these properties," says Putnam. In his view, the two shopping centers under Oxford responsibility can no longer be considered "first class" when it is clearly stated in the leases that the owner has an obligation to ensure that they meet this definition.
The boss of North America's oldest company explains that "first-class" shopping centers are "attractive" to retailers because they promise their traffic. They are “hospitable” to the consumer and “offer them a pleasant environment” through their fast food court and restaurants. However, since the start of the pandemic, HBC no longer enjoys these benefits, Mr. Putman regrets.
I am not aware of any marketing efforts to generate interest in shopping centers. Oxford simply seems to hope that consumers will come back on their own, or is indifferent as it expects the entire burden of the pandemic to be borne by the tenants.
Ian Putnam, President and CEO de La Baie d & # 39; Hudson
In addition, according to the manager, Oxford has not taken the necessary steps to ensure customer safety, either by adding signage or by adding new equipment (opening system contactless doors for example). He says it is "clear that customers are nervous".
Stores still short
As a result, HBC says, its stores have "seen a significant drop in traffic and sales since March." “And sales are not increasing. On the contrary, it gets worse instead of better. In addition, the decline in profitability is even more dramatic given the increase in operating expenses, the affidavit said.
In short, large checkout stores are "unprofitable," says Putman.
The retailer gives a very accurate picture of the situation in the two shopping centers managed by Oxford.
We learn that in April, during the worst of the pandemic, the number of transactions on Promenades Gatineau fell by 99.1% (from 16,090 to 149) compared to the same month of the previous year. Sales declined 99.5% (from 1.07 million to $ 7,926).
Five months later, in September, transactions were still 35% less than a year earlier (9962 instead of 15,337). And sales fell nearly 29% (from 1.07 million to $ 759,000).
The return to normal is even slower at the Galeries de la Capitale; September sales were 39% lower than a year ago ($ 1.73 million to $ 1 million). The number of transactions decreased by 43% (from 22,425 to 12,684).
"Given the increased restrictions imposed by Quebec, I expect October [aux Galeries de la Capitale] to be worse than September," says Putman.
Oxford is defending itself
In a series of letters sent to HBC in September, Oxford rejects any criticism of the retailer, calling his claims "unfair." The manager claims to respect “all of his obligations”. The manager added that "any statement to the contrary appears to be an attempt to make people forget that HBC is failing to meet the obligations of its various leases."
HBC also filed an affidavit from a retail expert, James Tates, regarding the Promenades Gatineau.
The owner has still not provided the required items in a first-class mall, which is a place to shop, eat and socialize in an environment that is considered clean, safe and predictable.
James Tates, Retail Sales Expert
According to him, these "shortcomings" explain the drop in traffic to places and sales.
June, July and August sales per square foot at the mall would have fallen by more than 16% (to about $ 370), he reports, based on Oxford data. Passenger numbers are said to have fallen 15% in June, nearly 12% in July and 8.5% in August.
HBC further regrets that Oxford "took him by surprise" by filing a lawsuit while the parties were in talks. The shopkeeper says he has no intention of continuing without paying rent and says "not to be insolvent".
(Re) read our story about the Oxford trial.
Quebec-based Cominar is suing the retailer for nearly $ 33 million and wants to rip it off, La Presse revealed last week. HBC would not have paid its rent to Mail Champlain, Center Rockland and Center Laval.
(Re) read our report on the Cominar lawsuit
HBC told La Presse that the arguments in this case would be similar to those brought before the Court in the Oxford case.
Dorval Property Corporation, a Toronto real estate company that owns Les Jardins Dorval, is also suing HBC for the same reason. His claim is nearly $ 660,000.