Operator of a 38 store estate in the UK, and one of the biggest companies in the world by capitalised value on the NASDAQ Stock Exchange, the iPhone-maker Apple posted a record profit of $55.3bn last year. And last week the company, which despite having its stores closed throughout the period due to Covid-19, reported 2nd quarter sales up by 11% to a record $59.7bn (£45.6bn).
Despite its huge advantages the company has over many traditional retailers on the high street, it is nevertheless pushing for these huge rent reductions to the consternation of its landlords up and down the country.
The company has said that it is offering to extend its leases by several years in return for the rent reduction concession plus a rent-free period.
Apple says it is seeking to bring its rents into line with other retailers, many of them having negotiated cut-price deals with their landlords, as they desperately try to keep their stores and shopping centres occupied. The difference between many other retailers and Apple is that many of the former businesses are “on their uppers”, unable to make up for lost sales as Apple can through its online sales.
According to a Sunday Times report, Apple has said that online demand for iPhones and iPads has been “phenomenal” during the lockdown period, even though its stores remained closed. Apple’s outlets are said to be among the most profitable in the industry and their customer draw in shopping centres, means that landlords are desperate to keep them as tenants.
As the stores have varying years left on their leases their landlords are not legally obliged to respond to Apple’s demands, but any concession agreements arrived at are likely to be commercial decisions based on Apple’s long-term value to their landlords.
Last week, Apple CEO Tim Cook, along with the other main Silicon Valley tech titans, Facebook, Google and Amazon, appeared before America’s Congress faced with the accusation that they are using their market dominance to crush competitors and they face the further question as to whether they should have their businesses broken-up in the public interest?