Well asks for rent reductions as COVID-19 triggers 25% income drop
Well Pharmacy has approached its landlords to ask for rent reductions following a 25% income dip as a result of the COVID-19 outbreak, C+D has learned.
Well has written to “approximately 580 landlords” asking for help with rent payments, including “reductions and to pay on a monthly basis rather than a quarterly one to ease the pressures on cashflow during these difficult times”, Well chief financial officer Lynn Krige told C+D earlier this week (June 16).
The “vast majority” of work in the Well branches during the pandemic has focused on dispensing prescriptions, which has “a very small margin”, she said. Well currently operates 752 community pharmacies, of which 626 are leaseholds.
The outbreak of COVID-19 has meant a “significant hit on our performance”, with income across the business dropping by “circa 25%” in the period, Ms Krige said.
This is largely a result of the “restricted access” for customers created by social distancing measures and the fact that the multiple has “not been able to carry out the majority of the services we receive income for”, she explained.
Well has “rightly” also spent “large amounts on protective equipment to keep our teams and patients safe”, she said.
“The success of Well and the landlords is inter-dependent, and we hope this spirit of cooperation and understanding during a time of national emergency will help us all be successful in the future,” Ms Krige added.
Well is not the only multiple is conversation with its landlords about rent payments and schedules. The COVID-19 pandemic has “severely impacted” trading at Boots stores, which have recorded a significant reduction in footfall, a spokesperson told C+D earlier in the week (June 16).
Many Boots branches “have just not had any customers over the past eight weeks” and the multiple has had to temporarily close around 100 branches.
The multiple recently approached some of its “larger commercial landlords” to suggest changes to rent and service change payments. It “reached revised agreements with many landlords and while some discussions are still ongoing, we have paused some payments,” the spokesperson told C+D.
Lloydsphamacy has asked its landlords to accept rent payments on a monthly basis rather than every three months, the multiple told C+D on Tuesday (June 16).
This measure has received an “overwhelmingly positive response” from landlords, a spokesperson for Lloydspharmacy’s parent company McKesson UK told C+D. The multiple believes this change will help the business “keep liquidity in the supply chain” and enable it to continue to help patients during these “challenging times” they added.
In a blog for Retail Gazette on June 15, Lloydspharmacy chief financial officer Chris Keen said retailers “are facing an existential threat” following investment in a number of health and safety measures introduced in light of the COVID-19 pandemic.
“We shall be serving our patients and communities long into the future. And that is why landlords need to understand that their forbearance will help secure their income long term, “ Mr Keen said in the blog, also published on the McKesson UK website.
“We’re not asking for rent reductions (unlike some), just that rents are spread evenly over the next three months,” Mr Keen said.
English pharmacies have received a total of £350m in “advance funding” in recognition of the “cashflow crisis” they are experiencing due to COVID-19, while pharmacies in Scotland received an extra £5.5m on top of the advance payments due for the end of April.