In the face of a retail industry apocalypse, Simon Property Group is fighting back. An Indiana judge ruled in favor of the Indianapolis-based mall operator Monday, forcing Starbucks to keep 77 failing Teavana stores open and honoring their leases. The Seattle-based coffee chain announced it planned to close all 379 Teavana locations in July. In August, Simon malls countered with a lawsuit.
Simon sought injunctions from the Indianapolis-based court, preventing the coffee company’s store closings by alleging Starbucks was “shirking its contractual obligations at the expense of Simon’s shopping centers and the dozens of communities they serve and support.”
Noting the distress that the retail industry finds itself in, the mall operator acknowledged that it had experienced many store closings in recent years. But the difference between those retailers and Starbucks was that the former were under financial stress, according to the property company. “That obviously is not the case with Starbucks, which is one of the largest and most recognized companies in the world,” the lawsuit said.
Teavana, which was bought by Starbucks for $620 million in 2013, has since seen a decline it its foot traffic, particularly in malls. Earlier this year, disappointing financials raised alarms at the parent company, and some now think we may even be at ‘peak Starbucks.’
If that’s the case, the Teavana ruling might complicate things for future Starbucks—and other store—closures, as commercial real estate owners look to minimize their losses.
“If you are a tenant that has to close a bunch of stores that are based in malls, you are pretty scared after this ruling,” The New York Post reported an anonymous source as saying.
“We are disappointed in the judge’s ruling and will continue to focus on finding a resolution,” said Starbucks in a statement. There has been no word yet on whether Starbucks will file and appeal.
