2020 was a tough year for a large number of businesses, including retailers, movie theaters, and gyms. The coronavirus pandemic obliterated revenue and forced businesses to make hard choices -- including falling behind on rent to their commercial landlords. Here's an overview of how some well-known chains did last year.
Movie theaters saw their revenue drop substantially during the pandemic, as operating restrictions limited capacity and a lack of new movies drove demand downward. Regal Cinemas, owned by Cineworld Group (LSE: CINE), ended the year having paid a total of 31.67% of its rent. Given that Cineworld made the decision to close all theaters in October, that's not shocking.
24 Hour Fitness
A number of gyms filed for bankruptcy in 2020, and 24 Hour Fitness was one of them. The chain paid just 39.74% of its rent due for the year and recently emerged from a Chapter 11 reorganization with $1.2 billion less debt. Let's see if that helps it stay current in 2021.
Sluggish sales at The Gap (NYSE: GPS) caused it to fall behind on its rent in 2020, paying just 45.38% of what it owed for the year. In March and April, the company's stock price plummeted as forced store closures hit the retailer hard. However, Gap did see a 5% increase in same-store sales during 2020's third fiscal quarter. Fourth-quarter earnings won't be released until March 2021.
Victoria's Secret, which is owned by L Brands (NYSE: LB), paid only 47.16% of its 2020 rent. Though same-store sales rose for Victoria's Secret during 2020's third fiscal quarter, they also declined during the nine-week period ending on Jan. 2, 2021.
Women's boutique Francesca's (NASDAQ: FRAN) filed for Chapter 11 bankruptcy protection in December after making plans to close well over 100 stores. The retailer only paid 49.30% of its rent in the course of 2020.
AMC (NYSE: AMC) paid just 54.91% of its rent in 2020. Given that the company was teetering on the edge of bankruptcy for the latter part of the year, that's not terrible. AMC was recently able to narrowly avoid bankruptcy by raising nearly $1 billion, a large portion of which came from the sale of stock.
Women's chain Lane Bryant paid 55.25% of its rent last year. Its parent company, Ascena Retail Group (OTCMKTS: ASNAQ), filed for bankruptcy in July. Sycamore Partners, a leading private equity firm, took over Ascena's brands later on in the year.
Bath & Body Works
Bath & Body Works, also owned by L Brands, paid 57.63% of its rent in 2020. During the year's third quarter, Bath & Body Works' same-store sales rose by 38%, which helped the retailer cover a larger chunk of its lease obligations.
What's in store for 2021?
There's a good chance more retailers will fall behind on their rent as 2021 chugs along. Some retailers may also seek to renegotiate existing leases -- something mall and shopping center operators may have no choice but to agree to in order to avoid a massive revenue hit and a vacancy crisis.