Facing Criticism, Adidas Says It Will Pay Rent in Germany After All

The first of the month has brought with it a host of controversies over rent — not only for out-of-work residential tenants but also among major retailers and their landlords.

Adidas apologized Wednesday for its plans to use Germany’s eviction freeze to defer rent payments on stores that are closed due to the coronavirus pandemic. While the country’s economic relief bill protects both individuals and businesses from eviction for delayed rent payments between April 1 and June 30, officials criticized Adidas for taking advantage of legislation intended to help those facing financial hardship.

The brand, which posted profits of 1.9 billion euros ($2 billion) in 2019, was one of several companies that announced plans to stop paying rent during the period, with H&M, Puma and Deichmann, Europe’s largest footwear chain, indicating similar intentions.

In an open letter posted on its German news site, Adidas walked back its earlier statements, saying it had paid its landlords for the month.

“Almost all over the world, there is no normal business anymore. The shops are closed. Even a healthy company like Adidas cannot stand this for long,” the letter stated. While it has taken measures to preserve the business — cutting executive pay, halting share buybacks and undertaking a short-term work scheme with the German government in which it will pay a portion of staff wages to avoid layoffs — the athletic giant still needs to access credit to keep paying its 60,000 employees.

The rent deferral was one strategy Adidas said it hoped would alleviate some of its short-term pain, but it quickly came under fire from German politicians, one of whom tweeted her intentions to boycott the brand.

In an email to FN on Monday, an Adidas representative noted that the company was not intending to skip its rent payments — only defer them.

“We are in close contact with the landlords concerned,” said the spokesperson. “Our landlords, major property marketers and insurance funds, have for the majority shown understanding for this measure.”

In its apology today, Adidas acknowledged the backlash and asked for consumers’ forgiveness given the widespread economic challenges. “This crisis is also an exceptional situation for us, which presents us with unprecedented challenges every day. We made a mistake and lost a lot of trust. It will take time to regain your trust. But we will do everything for it,” the statement said.

In mid-March, Adidas said it expected to see a revenue hit of as much as $1 billion in the first quarter of 2020 due to coronavirus-related store closures in China. It has yet to issue any forecasts regarding the closures in Europe and North America.

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