Retail - Covid Resurgence And The Room For Further Rent Negotiations: Sytematix
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The retail sector’s nascent recovery is hit by the resurgence of Covid-19 infections. Customer footfalls continue to decline due to lockdown-like curbs to control the spread of the virus.
Given the severe strain on business and the expiry of lease agreements, retailers are seeking rental concessions again; while they could secure rental waivers/discounts last year, landlords are hesitant to extend concessions this time. As rent is a major operating expense, failure to renegotiate rentals will increase the problems of retailers multifold.
Within our coverage, VMART pays the lowest rent (~5% of sales) while ABFRL pays the highest (~14% of sales). Hence, VMART will be less impacted than other players.
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