Taubman Centers Inc. is still working to fully rehab its Mall of Puerto Rico property after the commonwealth was pummeled by successive hurricanes, but it’s taking to the courts to make Saks Fifth Avenue do its part.
Robert Taubman, the mall operator’s chairman, president and chief executive officer, said during a conference call discussing a mixed third-quarter performance that his company filed a complaint with the Puerto Rico Superior Court to force Saks to restore its store location on the island.
Taubman said the complaint, filed Wednesday, is aimed at forcing Saks “to properly commence reconstruction of its building and to complete the repairs to be ready for occupancy as expeditiously as reasonably possible.”
He added that due to continually unstable power on the island, the mall’s reopening was delayed to Oct. 19, but that about 55 of 90 tenants are operating. Others remain closed and are working to be open by the holidays. However, at least 15 stores are faced with completely rebuilding and will not be open until next year.
Both of the mall’s retail anchors, Nordstrom and Saks, “sustained significant damage” from the storms. While Nordstrom has said it’s working to open as quickly as possible, although that won’t likely be until “well into” next year, Saks “has not provided a timeline for reopening,” Taubman said.
“Under their agreements, they are required to rebuild and reopen as expeditiously as possible,” he said.
Beyond those details, Taubman said his company was “not able to discuss the Saks litigation.” He noted later in the call that traffic at the mall since reopening “has actually been very good” without either of the department stores.
“Before the hurricane our August sales [at the mall] were actually up 17 percent year-over-year,” Taubman said. “So, the center was really gaining traction and it’s very hard to predict…how long it will take to really see San Juan in Puerto Rico come back.”
A spokeswoman for Saks’ parent company Hudson’s Bay Co. said the retailer is in fact working to restore the location.
“Our store sustained significant damage from Hurricane Maria and we are in the process of repairing and rebuilding the store,” the spokeswoman said. “As a company, our focus has always been the safety and well-being of our associates, and this focus remains in the aftermath of this crisis.”
HBC is facing off with activist investor Land & Buildings, which is urging the retailer to sell its German business and taking issue with the company’s decision to sell its New York Lord & Taylor flagship for $850 million. HBC has also been dealing with sluggish sales, and its chief executive officer, Jerry Storch, is leaving after three years.
As for the impact of the historic hurricane season on Taubman as a whole, Simon Leopold, chief financial officer, said the third quarter was not “materially” affected, but that will likely change come the fourth quarter.
“We anticipate that the center’s performance will be impacted in the fourth quarter, and for the foreseeable future,” Leopold said. “For this reason, we’ve removed the mall of San Juan from our comp center pool.”
Although Taubman has insurance, including for business interruption, Leopold said proceeds from the policies “will likely lag.”
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