A bounce in retail sales and the quick return of “purposeful” shoppers to malls are driving a recovery at one of Australia’s largest shopping centre owners.
Shopping centre giant Vicinity Centres, which part-owns and manages Australia’s largest mall, Chadstone in Melbourne, has pivoted from a thumping $394.1 million loss in the half-year to December 2020 to a $650.2 million profit in the latest December half.
Shoppers flocked to Chadstone for the Boxing Day sales.Credit:Joe Armao
The landlord attributed its brighter outlook to consumers who were quick to return to retail malls with “confidence and the capacity to spend” after the grinding lockdowns in NSW and Victoria lifted last year.
A significant chunk of the group’s profit, $320 million, came from rising asset values of its mall portfolio – a lumpy figure that is excluded from payouts to security holders. However, funds from operations – a measure of its earnings – rose 7.7 per cent to $287 million.
“In NSW and Victoria, retail sales rebounded strongly when restrictions eased in October 2021,” chief executive and managing director Grant Kelley said.
By November and December last year, retail sales had increased 5.6 per cent on pre-COVID levels, driven by robust foot traffic across its portfolio.
‘Across all states, shopping remains more purposeful, with average spend per visit up 29 per cent on pre-COVID levels.’
Mall visitor numbers jumped from 50 per cent of pre-COVID levels at the start of last year to 84 per cent by the end of the year in NSW and Victoria. In states less affected by the outbreak, customer numbers are near pre-pandemic levels and retail sales growth is “consistently strong,” Mr Kelley said.
“Across all states, shopping remains more purposeful, with average spend per visit up 29 per cent on pre-COVID levels, with electrical, sporting goods and luxury retailers, together with discount department stores continuing to outperform the portfolio.”
Vicinity attributes the retail growth to the buoyant local economy and restrictions on international travel, which are corralling Australians into spending at home.
But, it said, while the recovery from the pandemic is gaining momentum, it is not out of the wilderness yet.
The spread of Omicron continues to hit visitor numbers, particularly at city-based shopping centres like The Strand Arcade in Sydney and Emporium Melbourne where work-from-home rules and border closures are proving challenging.
“In January 2022, Omicron had a material impact on visitation, particularly at the group’s centres located on the east coast of Australia, however Vicinity has seen an upward trend in the first two weeks of February,” Mr Kelley said.
The company is still providing rent assistance to struggling tenants.
Since the start of the pandemic in February 2020, it has allocated more than $300 million to support retailers. About 90 per cent of that is outright rent forgiveness, it said.
Vicinity said expects funds from operations per security this financial year to be in the range of 11.8 cents to 12.6 cents.
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