Gap sinks to worst quarterly loss on store closures

A cyclist looks at murals painted on a boarded up GAP store

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Clothing retailer Gap has reported a loss close to $1bn due to store closures because of the coronavirus pandemic.

The company was $932m (£740m) in the red for the three months to May, compared with a profit of $227m in the same period previous year.

The retailer, know for its denim, chinos and T-shirts, included in its quarterly loss a $484m write-down on its stores and operating lease assets, and a $235m charge on excess stock.

Retailers of non-essential goods, such as clothing, have been significantly affected by store closures across many territories, which were created to slow the spread of Covid-19.

Simon Property Group temporarily closed all of its properties in March after major retailers at its malls, such as Gap, Macy's and Nodstrom's, shut their stores.

The pandemic triggered several high-profile retail insolvencies in the United States, including fashion chain J.Crew and department store chains JC Penney and Neiman Marcus.

Apparel retailer Gap had already stated publicly in late April that it stopped paying rent on its temporarily shuttered stores, which amounted to roughly $115 million in monthly expenses in North America.

Gap has more than 390 stores at Indianapolis-based Simon's malls, including its namesake brand, Old Navy and Banana Republic.

The retailer has previously announced plans to close shops to streamline its store estate. The company said Thursday that its first-quarter revenue fell 43% to $2.1 billion. Online sales fell for Gap and Banana Republic, which sells suits and cardigans.

The nation's biggest mall operator is suing its largest tenant for not paying rent during the pandemic in what could be the beginning of a torrent of litigation over rent payments.

The biggest mall owner in the country Simon Property Group is suing one of its biggest tenants, Gap, for failing to pay more than $65.9 million in rent and other charges due during the coronavirus pandemic, according to a lawsuit filed Tuesday in DE state court.

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