Starbucks Stopped from Closing 77 Teavana Stores
In an unusual turn, a judge ruled that Starbucks could not close 77 Teavana stores located in Simon Property Malls — Starbucks announced earlier this year its plan to close the underperforming tea chain with 379 locations.
The real estate group went to court to block the closing of Teavanan stores in its malls, citing such a high profile closure could spark other stores to close in its malls, a move it could not withstain. The jugdge found that the coffee giant could better withstand the financial hit (estimated to be $15 million over five months) better than Simon and ordered the stores not to close by the end of the year as planned.
A flood of store bankruptcies and store closings have left many shopping malls in a difficult position, but retail experts note that it is rare for a judge to order stores to remain open – a move the judge admitted had never been done before for non-anchor stores.
“I’m somewhat shocked by the ruling,” said real estate lawyer Joshua Stein, in New York Post article. The judge “catalogues every possible detriment to Simon as a result of having vacant space,” Stein added. “That’s part of a job description of owning real estate. You deal with it and don’t get injunctions to have your tenant continuing to operate.”
“We are disappointed in the judge’s ruling and will continue to focus on finding a resolution,” Starbucks noted in a statement. It remains unclear if the chain can or will appeal.
Simon’s argument in the case was that Starbucks was allowed to break its lease, the real estate group could be forced to fill vacancies with less desirable companies and lease terms.