Washington Prime Group, a mall owner with more than 100 shopping centers across the US, has filed for Chapter 11 bankruptcy

US Mall coronavirus
A shopper goes up in the escalator in Baldwin Hills Crenshaw Plaza on Tuesday, Dec. 8, 2020 in Los Angeles, CA.

  • Mall owner Washington Prime Group has filed for Chapter 11 bankruptcy protection.
  • It operates roughly 100 US malls and says business will continue as usual during the proceedings.
  • The company says COVID-19 presented “significant challenges” that made the filing necessary.
  • See more stories on Insider’s business page.

Washington Prime Group, a mall owner operating roughly 100 locations across the US, has filed for Chapter 11 bankruptcy protection.

The company will restructure its debts after COVID-19 caused business at many shopping centers to take a nosedive.

“The COVID-19 pandemic has created significant challenges for many companies, including Washington Prime Group, making a Chapter 11 filing necessary to reduce the Company’s outstanding indebtedness,” the company said in a press release announcing the filing on Sunday.

Columbus, Ohio-based Washington Prime Group had total assets of just over $4 billion and total debts of nearly $3.5 billion as of the end of March, according to a filing in the United States Bankruptcy Court for the Southern District of Texas.

Washington Prime Group said in the release that business will continue as usual during the proceedings, thanks to $100 million in debtor-in-possession financing.

The company is executing a restructuring plan that has support from creditors holding roughly 73% of its secured corporate debt and 67% of its unsecured notes, according to the press release. Washington Prime Group says the plan will allow the company to “substantially deleverage its balance sheet and strengthen its business and operations going forward, either through a full equitization of the Company’s unsecured notes or an alternative value-maximizing transaction that would repay, in full in cash, all of the Company’s corporate-level debt.”

The pandemic exacerbated business woes for shopping centers, but malls were already facing challenges in recent years as much consumer focus continued to shift away from brick-and-mortar stores in favor of e-commerce. Washington Prime Group CEO Lou Conforti told Insider last year that the industry is “very passive,” saying it would need to adapt to serve additional purposes in order to survive.

Several popular mall retailers, including JCPenney and Neiman Marcus, have also filed for bankruptcy during the pandemic.

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Victoria’s Secret is being sued by a mall landlord for $32 million, alleging it failed to pay rent and abandoned a New York store

Victoria's Secret
Victoria’s Secret’s store in Westfield World Trade Center.

  • A landlord sued Victoria’s Secret, alleging it stopped paying rent and ditched a New York store.
  • A spokesperson for Victoria’s Secret told Insider that it cannot comment on ongoing litigation.
  • Victoria’s Secret has been tightening its business and closing stores to cut back on costs.
  • See more stories on Insider’s business page.

A mall landlord is suing Victoria’s Secret for $32 million, alleging it has breached its lease contract by closing one of its stores in New York and refusing to pay rent. The store is located in Westfield’s World Trade Center mall in Downtown Manhattan.

According to Westfield’s lawsuit, Victoria’s Secret informed the landlord that it was ending its lease at the start of this year. The lingerie giant said it was invoking its right to a clause in the contract that allows it to cancel its lease early if Westfield fails to keep 75% of the stores in its mall stores open and running for more than 12 consecutive months.

Read more: The rise, fall, and comeback of Victoria’s Secret, America’s biggest lingerie retailer

But Westfield alleged in the suit that it had proved to Victoria’s Secret that it was not in breach of this clause and that the retailer, therefore, “had no right” to terminate the lease.

“Nonetheless, Victoria’s Secret refused to pay rent and abandoned its leased premises with years remaining, all in breach of its lease, ” the suit said. “As a result of Victoria’s Secret’s breaches, Westfield has been damaged in an amount that exceeds $30 million.”

A spokesperson for Victoria’s Secret told Insider that it cannot comment on pending litigation.

While Victoria’s Secret’s woes predated the pandemic, this crisis only adds to its problems and the company has been tightening up its business and streamlining costs ever since. This has included a wave of store closings in 2020 and a retreat from the mall.

Its parent company, L Brands, has taken steps to pull Victoria’s Secret and its sister brand, Bed Bath & Body Works, out of underperforming malls. In its most recent earnings call, L Brands said that around 47% of the more than 1,700 Bath & Body Works stores were now located in off-mall locations.

Last month, L Brands said it planned to spin itself into two separate public companies – Victoria’s Secret and Bed Bath & Body Works – after earlier attempts to sell Victoria’s Secret to private equity buyers didn’t elicit offers that L Brands considered equivalent in value to what it could get in a spinoff to shareholders, according to a New York Times report.

Westfield is considered to be one of the most valuable mall chains in the US, however, and is one of few that has managed to survive in a tricky retail environment.

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Epic Games, the video game giant in a legal battle with Apple, is turning a defunct mall into a new headquarters – see inside

Fortnite
An attendee stops to text next to Epic Games’ Fortnite sign at E3, the annual video games expo in Los Angeles.

  • Epic Games spent $95 million on a North Carolina mall that will become its new headquarters.
  • Epic, the maker of “Fortnite,” is involved in a major lawsuit with Apple in California.
  • Epic plans to turn the mall into a multimillion-square-foot complex.
  • Visit Business Insider’s homepage for more stories.

Epic Games, the creators of the popular game “Fortnite,” bought a failed mall in North Carolina for $95 million that will eventually become its new headquarters.

The gaming giant closed on the deal on December 31, Daniel Geiger at Insider first reported. Epic plans to create a multimillion-square-foot headquarters, with hopes to open it by 2024.

Read more: Kids are losing tens of thousands of their parents’ money betting on video games like ‘Fortnite.’ Here’s a look inside the secret underworld.

The purchase comes after a wild year for Epic, which sparked a debate in the tech world around app-store policies when the company offered an in-game payment system for “Fortnite” that bypassed the usual app-store fees. Apple and Google both subsequently pulled the game from their stores, and now Epic and Apple are battling it out in a California courtroom.

Here’s the mall that Epic spent $95 million on.

Cary Towne Center encompasses 980,000 square feet of space on 87 acres.

Cary Towne Center
Cary Towne Center.

Source: Epic

The mall was a victim of the similar forces tanking malls across the country: anchor tenant JC Penney closed, and within months Sears and Macy’s followed.

Cary Towne Center
Cary Towne Center.

Source: Business Insider

Developers Turnbridge Equities and Denali Properties bought the property in January 2019 from mall chain CBL & Associates, which filed for bankruptcy in November 2020.

Cary Towne Center
Cary Towne Center.

Source: Business Insider

At the time developers bought the mall from CBL, it was at only 65% occupancy.

Cary Towne Center
Cary Towne Center.

Source: WSJ

When they purchased it, developers told WSJ that they planned to turn the mall into a mixed-use space with offices and residential areas.

Cary Towne Center
Cary Towne Center.

Source: WSJ

Developers paid about $40 million for the property in 2019, less than half of what Epic paid two years later.

Cary Towne Center
Cary Towne Center.

Source: Business Insider

“It’s minutes from downtown Raleigh, it’s close to the airport, and it’s one of the only critical masses of land ready to build on in one of the fastest-growing markets in the country,” Jason Davis, a managing director at Turnbridge, told Business Insider.

Cary Towne Center
Cary Towne Center.

The new headquarters will likely be much larger than Epic’s current 250,000 square foot office, also in Cary, North Carolina.

Cary Towne Center
Cary Towne Center.

The facilities will include both office buildings and recreational spaces. “We are committed to working with the Town of Cary to explore ways some of this property might be used by the community,” Epic spokeswoman Elka Looks told Insider while declining to share details about the plans and size of the future headquarters.

Cary Towne Center
Cary Towne Center.

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The last 2 Toys ‘R’ Us stores in the US have closed down after the COVID-19 pandemic hit sales

tru kids
A rendering of a redesigned Toys ‘R’ Us store, from owner Tru Kids.

The last two Toys ‘R’ Us stores in the US have reportedly closed, bringing to an end a two-year effort to re-establish the onetime behemoth’s retail footprint. 

The Toys ‘R’ Us brand, purchased in 2019 by Tru Kids, will reportedly continue as an online retailer. The brand is active on Twitter, YouTube, and other social channels, but its retail effort was hindered by the rise of COVID-19, according to CNBC

“Consumer demand in the toy category and for Toys ‘R’ Us remains strong and we will continue to invest in the channels where the customer wants to experience our brand,” a Tru Kids spokesperson told CNBC.

The final stores were in Texas and New Jersey, Bloomberg reported on Friday. 

toys r us founder
Toys ‘R’ Us founder Charles Lazarus.

After its first store opened in 1957, Toys ‘R’ Us grew into a national chain of more than 700 US locations. In the 1980s and 1990s, the company’s ads saturated children’s TV, saying, “I don’t wanna grow up, I’m a Toys ‘R’ Us kid.” 

 

It filed for Chapter 11 bankruptcy protection in September 2017.

At the time, the company placed some blame on Amazon, Walmart, and Target, saying online retailers had created a “perfect storm” that drove Toys ‘R’ Us into bankruptcy. 

The following March, it told employees it would be closing all retail locations in the US. Its UK arm also announced plans to liquidate its business, closing about 100 stores. 

Read more: A ‘tsunami’ of retail bankruptcies is about to sweep the US and drown courts in Chapter 11 filings, lawyer says

In February 2019, newly formed Tru Kids said it planned to revive the brand. In July 2019, the company opened new locations in Houston, Texas, and Paramus, New Jersey. 

The Houston store closed on January 15, and the New Jersey store closed on Tuesday, The Associated Press reported.

In 2020, the renewed company relaunched its website in partnership with Amazon.

Tru Kids didn’t immediately respond to a request for comment on Saturday. 

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Americans focused on nesting during the coronavirus pandemic help lift US holiday shopping sales

woman paying on phone online shopping
  • Holiday shoppers in the US spent 3% more than the previous year, led by online spending spikes on furniture and home improvement, says Mastercard.
  • “They shopped from home for the home, leading to record e-commerce growth,” Steve Sadove, senior advisor for Mastercard, said in a statement. 
  • Online sales in the 75 days prior to Christmas jumped 49% from the same year-earlier period, the company said. 
  • Visit Business Insider’s homepage for more stories.

Holiday shoppers in the US spent 3% more than the previous year, led by online spending spikes on furniture and home improvement.

As might be expected, online retail boomed as in-person lagged, according to data released Saturday by Mastercard. 

The company said online sales in the 75 days before Christmas jumped 49% from the same year-earlier period. 

The biggest bump over last year came in home improvement, continuing a yearlong trend. As people stayed home during the pandemic, they spent more on making their surroundings comfortable. Online home improvement sales soared about 80%.

“American consumers turned the holiday season on its head, redefining ‘home for the holidays’ in a uniquely 2020 way. They shopped from home for the home, leading to record e-commerce growth,” Steve Sadove, senior advisor for Mastercard, said in a statement. 

Holiday shoppers seemed to be focused on nesting, as online furniture and furnishing sales climbed 31%, and electronics and appliances climbed 6%. 

A rise in overall holiday spending – even by just 3% – will likely be met with cheers from retailers, many of which have had a difficult year bringing customers in.

“And, consumers shopped earlier than ever before. Across our expanded 75-day holiday shopping season, sales were up 3.0%, a testament to the holiday season and strength of retailers and consumers alike,” said Sadove in a statement. 

The holiday shopping season is marked off differently by some firms, but for many, it begins on the day after Thanksgiving, so-called Black Friday. Foot traffic on that day in US stores had fallen 52%, while online sales climbed 22%, according to Sensormatic Solutions. Mastercard said on Saturday that sales that day fell 16% year over year. 

But “Thanksgiving weekend through Cyber Monday remained a key time for shoppers, with Black Friday being the top spending day of the 2020 holiday season,” Mastercard said in a statement. 

In-store retail sales for items that are usually holiday staples slipped, as expected. In-person clothing sales dropped 19%, while luxury items dropped 21%, according to Mastercard.

In-person jewelry sales slipped 4%, while online sales rose 45%, according to Mastercard. 

Overall, in-person department store shopping fell 10%, but rose about 3% online. 

“Buy online, pick up in-store as well as technologies like contactless were key for retailers this season,” said Mastercard. 

About 38% of US shoppers had planned to spend less this holiday season, according to a study from Deloitte.

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