Major CE Retail Chain Stops Paying Rent, Federal Government Not Happy
Europe’s largest consumer electronic retail chain has stopped paying rent as the Company struggles to handle the impact of the economic fallout from COVID-19, the move has upset the German Federal Government.
Media Markt a German multinational chain of stores selling consumer electronics has numerous branches throughout Europe and is the second largest in the world after American retailer Best Buy, Australian Company Tempo is one of their suppliers.
MediaMarkt sparked outrage in Germany earlier this week after announcing they planned to stop paying rent on stores that have been forced to close over the coronavirus outbreak.
This led to the German Government stepping in with Finance Minister Olaf Scholz urging leading companies to refrain from taking rash action that could hurt property owners.
“It’s irritating when large companies simply announce a halt on paying rent,” Scholz told the Bild daily. He urged the retailer to reach out to their landlords to find a solution.
“Now is the time to work together,” he said.
The move comes after the German government unveiled a major rescue package to protect companies and jobs from the economic impact of the pandemic.
“It is indecent and unacceptable if financially strong firms now just stop paying their rents,” she added.
German sportswear maker Adidas, which made a net profit of nearly two billion euros ($2.2 billion) in 2019, has been hard hit by a slump in Chinese sales and massive store closures has also stopped paying their rent.
The company, one of Germany’s best-known brands, told the DPA news agency that it was “temporarily suspending rental payments, just like many other companies”.
German Transport Minister Andreas Scheuer said he was “disappointed by Adidas”, pointing out that many small landlords would be left out of pocket.
Adidas CEO Kasper Rorsted hit back claiming that the bulk of Adidas’s German landlords were “large real estate companies and insurance firms” who had “mostly shown understanding” for the rent freeze decision.
Adidas would continue to make payments to small private landlords, he said.