Simon Property Group sues Starbucks over Teavana store closures
Simon Property Group recently filed a lawsuit against Starbucks over its plan to shutter all 379 Teavana stores, 78 of which operate in Simon malls nationwide, the Indianapolis Business Journal reports.
The suit, filed Aug. 21 in Marion Superior Court in Indiana, seeks temporary and permanent injunctions against the closures on the grounds that leases haven’t been fulfilled.
Starbucks bought the tea retailer in 2013 for $620 million in cash. A Simon Property Group spokesperson declined to comment to Retail Dive because the company doesn’t comment on litigation. A Starbucks spokesperson told Retail Dive: “We are responding to the lawsuit and are working to resolve this dispute.”
This isn’t the first out-of-the-box move Simon has made to retain struggling stores in its malls. Last year, Simon and a consortium pooled $243 million to take over teen apparel retailer Aeropostale in order to salvage those retail stores.
In its July press release announcing the Teavana closures, Starbucks said most stores are anticipated to close by spring of 2018. Simon, however, alleges in the lawsuit that the company is planning to shutter most by the end of the year because the retailer isn't showing gains fast enough, according to the Business Journal report.
“Starbucks’ decision to close its Teavana stores is simply an effort to further increase its economic gains at the expense of others,” Simon said, according to court papers cited by the publication. “Starbucks does not contend that Simon breached any lease or that Starbucks cannot remain viable if it continues to honor its promises in its leases for stores in Simon’s shopping centers. Instead, Starbucks simply believes it can make more money if it violates the leases than if it honored its contractual promises and obligations.”
In recent years, Simon Chairman and CEO David Simon has pushed back against the notion that e-commerce is responsible for the current challenges in retail. But he has also said that landlords and retailers must both take steps and make the investments needed to make stores inviting places.
“I'm hopeful that they're going to reinvest in their stores, improve their inventory mix and service their customer better,” he told analysts in April, according to a transcript from Seeking Alpha. “And, by the way, we've got to have the same pressure on us to do that. So, it's a two-way street. We are up for the challenge. We have the conviction in our business to do that as you know if you go through our properties by and large, they look, they feel great. We're going to redevelop a lot of opportunities.”
- Indianapolis Business Journal Simon sues Starbucks in bid to block mass Teavana closings
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