Zara, Apple and reviving cinemas among best-performing Westfield tenants

Zara, Apple and reviving cinemas among best-performing Westfield tenants
Larry SchlesingerDecember 8, 2020

International brands like Zara and Apple have helped drive shoppers back to Westfield shopping centres and drive up sales among mini-major retail tenants, according to the latest quarterly update from the shopping centre group.

Turnover in the mini-major category, which includes Zara and Apple along with the likes of JB Hi-Fi, Dick Smith and Priceline, was up 2.7% for the year to March and 4.3% for the first three months of 2012, according to March quarter results filed by Westfield Retail Trust (WRT), the spin-off entity that manages the $13 billion portfolio of Australian and New Zealand shopping centres.

Over the quarter sales among mini-majors grew at nearly four times the rate of total speciality sales across Westfield’s Australian portfolio (1.1%) and more than double the 1.2% growth achieved over the year to March.

“Retailers such as Apple and Zara demonstrate the success that can be enjoyed through an exciting and engaging retail experience. These mini-majors are proving to be great destinational retailers,” said Westfield Retail Trust chairman Richard Warburton in his address to shareholders.

Warburton says Westfield centres are continuing to “evolve and adapt to the environment and new retail trends”. 

“Innovative dining precincts, expanded retail services, new market entrants and larger-format stores are examples of this,” he adds. 

Zara opened its 1,800-square-metre store in Westfield Sydney on Pitt Street mall in April last year – its first store in Australia.

A new Zara store is planned at Westfield Doncaster for later this year.

There are Apple stores in Westfield Doncaster and Westfield Southland in Melbourne, Westfield Chermside in Brisbane and Westfield Hornsby in Sydney.

According to the quarterly results, cinema tenants are also performing much more strongly, with sales rising 9.3% for the first quarter of 2012 to be up 4% for the 12 months to March 2012, reversing a trend of declining sales reported last year.

The decline in department store sales appears to be bottoming out, with sales at the likes of Myer and David Jones down 0.2% for the quarter compared with a 5.2% decline in turnover for the year to March.

Discount department store sales (Kmart, Target, Big W) fell 2.5% over the quarter, with jewellery stores (3.7%) and footwear retailers (1.8%) also performing poorly.

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The impact of international stores in driving retail sales was noted recently by CBRE retail services associate director Max Cookes.

Cookes says international retailers have helped Melbourne retain its mantle as one of the strongest-performing retail markets in the country. 

“The recent level of enquiry we have received from international retailers has been stronger than this time last year,” says Cookes.

“Over the past 18 months, we have successfully reached agreements with Zara, Topshop, Paul Smith and Thomas Pink, who have all opened flagship locations in Melbourne.”

According to the WRT update, speciality Westfield rents increased 3.1% for the 12 months to March 31.

Speciality sales were strongest in Westfield’s Victoria shopping centres rising over the first three months of the year 3.1% to be up 4% for the 12 months to March 2012 compared with the previous 12-month period.

In comparison NSW speciality sales were up just 0.3% and down 0.6% for the year.

The second strongest performing state was WA, with Westfield centres recording a 2% rise in speciality sales for the quarter, accelerating from just 0.6% growth for the 12 months.

Speciality retail sales generate over $9,700 per square metre in Australia, and over NZ$8,200 per square metre in New Zealand with the portfolio remaining above ensures continued demand for quality retail space with the portfolio remaining above 99.5% leased.

In February, the trust reported comparable net operating income growth up 4.3% in the year to December 2011 attributed to “the strength, quality and resilience of the property portfolio”. 

Over 2011 Westfield signed over 2,800 lease deals covering more than 375,000 square metres of retail space. 

Westfield Retail Trust managing director Domenic Panaccio says Westfield Sydney sales continue to grow strongly across all categories, with the luxury precinct and food retail performing well. 

“Customer traffic also continues to grow. The Westfield Sydney and Sydney Central Plaza precinct is the most productive centre in the trust’s portfolio from a specialty sales perspective and we are extremely pleased with our flagship asset,” he says. 

Panaccio says the Westfield Sydney project is now complete, with the $1.34 billion Westfield Sydney Facility repaid. 

The trust also reconfirmed that distributable earnings and distribution in 2012 are forecast to be 18.75¢ per stapled security.

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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