German sportsgear maker adidas on Wednesday said it had made ‘a mistake’ when it decided not to pay rent on its shuttered shops in April, after the move sparked a widespread outcry. adidas was one of a string of retailers in Germany that said they wouldn’t be paying their landlords while their stores are closed as part of efforts to stem the coronavirus spread.
“We made a mistake and we lost a lot of trust,” the firm said in a letter on its German website.
“We would like to wholeheartedly apologise. We have paid our landlords the rent for April.”
According to a PTI report: adidas, which made a net profit of nearly two billion euros (US$ 2.2 billion) in 2019, has been hard hit by a slump in Chinese sales and store closures around the world.
But it faced massive criticism when it emerged last week that the group was planning to suspend rent payments as it grapples with the fallout from the coronavirus crisis.
The move comes after the German government unveiled a major rescue package to protect companies and jobs from the brutal economic impact of the pandemic.
It includes a provision that temporarily shields tenants from being kicked out of their homes or business premises if they experience financial hardship over the coronavirus measures. But Germany’s leading politicians urged financially sound companies not to take advantage of the situation, saying it showed a lack of solidarity at a time of crisis.
Finance Minister Olaf Scholz called the planned rent freezes by large retailers “irritating” while Justice Minister Christine Lambrecht said it was “indecent and unacceptable”. German MEP Katarina Barley tweeted that she had bought her last pair of adidas trainers, in a post that received over 9,000 likes.
CEO Kasper Rorsted on Sunday sought to calm the waters by saying that the bulk of adidas’s German landlords were “large real estate companies and insurance firms”. He had insisted that adidas’s small, private landlords would continue to receive their rent.
But the ongoing furore eventually prompted the company to ditch the rent freeze altogether.
In its letter, adidas said it had taken several steps to stop the bleeding, including scrapping a share buy-back programme and slashing executive pay.
In Germany, it has put some 1,200 workers on reduced hours whose pay will be topped up by the government’s aid package. The company added that it was also seeking to contribute to the fight against the pandemic by supporting aid organisations and producing face masks.