Valentino U.S.A. Inc. is looking to pull out of its four-story boutique on New York’s Fifth Avenue — arguing that the coronavirus has made it “impossible” to conduct business in the longtime luxury shopping hotspot.
Valentino was forced to temporarily shut its boutique in mid-March due to coronavirus-induced restrictions. The Italian luxury label, which signed a 15-year lease on the space in 2013, argues that the terms of the agreement were “frustrated” by its forced closure. Valentino gave notice to landlord 693 Fifth Owner LLC that it plans to exit the lease by year’s end — but 693 Fifth Owner denied that the coronavirus crisis was cause to sever the leasing agreement.
Lined with designer shops — Versace, Gucci and Stuart Weitzman are among Valentino’s neighbors — New York’s Fifth Avenue has long been a tourist hot bed. But while Valentino’s outpost is located on a “prestigious section” of Fifth Avenue, COVID-19 has rendered its business “substantially hindered, rendered impractical, unfeasible and no longer workable,” the label said in its complaint.
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“Unparalleled unemployment, financial and social disruptions, ongoing business restrictions, [executive orders] and COVID-19-related protocols have severely impacted brick-and-mortar retail sales, and will continue to do so, indefinitely,” Valentino’s filing reads.
Although some restrictions have been lifted — in-person shopping resumes in New York City today — Valentino says it is unable to offer certain services that are “vital to its business,” such as fittings. Further, Valentino wrote in its filing that even post-pandemic, “the social and economic landscapes have been radically altered in a way that has drastically, if not irreparably, hindered Valentino’s ability to conduct high-end retail business at the [Fifth Avenue] premises.”
The retail industry as a whole has been hit hard by the COVID-19 pandemic, which forced temporary store closures and caused individuals to pull back on discretionary spending. Companies have taken a number of steps to preserve cash flow, such as tapping revolving credit lines, furloughing workers and slashing operating expenses. Additionally, a number of retailers — among them H&M, Urban Outfitters Inc. and Burlington Stores — announced that they would not pay rent while doors were shut.
With few options, numerous commercial landlords have pursued litigation against their tenants. In New York district court, Gap Inc. was hit with a suit early last month by 48th Americas LLC. The commercial landlord said Gap had missed two months of fixed rent as well as other payments on its Midtown Manhattan store, with a total owed balance of $530,334.39. Similarly, the NBA was sued last month by 535-545 Fee LLC for allegedly failing to pay nearly $1.25 million in rent for its Fifth Avenue outpost.