Department stores - Myer, David Jones and Target - poorest-performing Westfield tenants

The strongest-performing Westfield tenants over the past three months have been the mini-major outlets (Dick Smith, JB Hi Fi, Priceline, etc), which recorded a 3.1% increase in sales over the quarter.

Despite sales falling 1.4% in the third quarter they are still 1.1% up on the year with speciality store rents increasing by 3.8% over the 12 months to September.

Westfield CEO Steven Lowy told an analyst briefing that for the nine months to September, new leases in Australia were signed at rents 1% higher than expiring rent, “a solid result in this environment”.

“Earlier in the year, some high profile administration occurred, including Borders, Angus and Robertson in Colorado, where around 80 stores closed. In a matter of months, almost all of these lease-up is now complete. This clearly highlights the strength of our portfolio and the underlying demand for space,” he added.

In the speciality store category, general retailers (Rebel Sport, Cotton On, General Pants) were the strongest performers, recording sales growth of 3.1% for the quarter to be up 4.5% over the last 12 months.

Once again, shops targeting more affluent shoppers such as speciality fashion stores and jewellery stores had poor quarters with sales falling 4.7% and 3.5% respectively. Footwear stores recorded a 2.6% decline over the quarter.

Over the last 12 months to September Westfield’s fashion store tenants have recorded a 2.2% shrinkage in sales revenue.

Homeware stores recorded the poorest turnover growth among the speciality stores, with sales down 5.3% for the quarter.

Department stores (Myer, David Jones, Target), which anchor many Westfield centres, continue to be the worst performing Westfield tenants, with sales down 12.5% over the three months to September and down 7.5% over the last 12 months.

Discount department store (Big W, K-mart) sales also fell over the quarter to be down 4.1% but are down only 2.7% for the year to September.

Coles and Woolworths along with other supermarket tenants recorded moderate growth of 1% but are up a relatively healthy 2.5% over the last 12 months.

Westfield’s cinema multiplex tenants have made a strong comeback in the three months to September 30, recording the third-highest sales growth of all tenant categories.

Cinema sales are down 6.5% for the year but have made a solid comeback in the third quarter, with growth of 2.1%, nearly double the retail sales growth of the group as a whole of 1.1%.

This improvement follows the release of six-month results in August for Westfield, which showed cinemas sales had fallen 8.7% across Westfield’s Australian business.

The performance of Westfield’s cinema tenants over the three-month period is in sharp contrast to cinema operators in shopping centres owned and managed by GPT, which recorded a 9.3% drop in turnover over the same period.

The release of Westfield’s fourth-quarter update in February 2012 should provide an indication of whether the recovery is a longer-term trend.


Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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