After delivering a bumper net profit in the latest half-year, department store giant Myer Holdings (ASX: MYR) has announced it is pulling the pin on its flagship store in Brisbane’s CBD in a major shake-up of the Myer Centre tenant register.
Myer, which has anchored the massive retail centre that straddles Queens Street Mall and Elizabeth Street since it was developed in 1988, says it has declined to renew its lease on the site which is jointly owned by Vicinity Centres (ASX: VCX) and superannuation manager ISPT Core Fund.
The company has revealed the move was prompted by the breakdown of lease renewal negotiations with the landlords.
However, the department store group is not planning to exit the Brisbane CBD altogether after revealing that it will ‘continue to search for alternative locations’.
“Whilst Myer remains committed to having a presence in the Brisbane CBD, it has not been able to reach appropriate and reasonable commercial terms with the current landlord, which will see the current store cease trading at the end of July 2023,” says the company in a statement.
“Myer has a proud history of serving the Brisbane community and will continue to do so through our Indooroopilly, Chermside, Carindale and Mt Gravatt stores, as well as online, while we continue our search for an alternative CBD site, with more appropriate commercial terms.”
Myer says staff at its flagship store will be redeployed where possible within the business and to other Brisbane stores.
“Whilst we remain committed to the Brisbane market, we have been unable to negotiate a reasonable commercial outcome with the landlord and as such will continue to look for an alternative CBD location,” Myer CEO John King says.
“We thank our team members for their service and will be providing redeployment opportunities at nearby stores.
“For our loyal customers, we will continue to serve the Brisbane area with our surrounding stores and our 24/7 online business while we explore future Brisbane CBD options, and we thank you for your ongoing loyalty.”
Myer’s shock plans to vacate its biggest store in Brisbane comes on the heels of a stellar half-year result announced earlier this month. Myer doubled earnings to $65 million, making it the strongest NPAT performance since the first half of FY14.
It is unclear how advanced discussions are to secure other potential Brisbane CBD sites which could include any number of proposed mixed-use developments currently in train.
The loss of Myer as anchor tenant will leave a gaping hole for the Myer Centre as the department store occupies more than half of the retail centre’s 63,000sqm of net lettable area.
Vicinity has a 25 per cent interest in the six-level centre, which is valued at $400 million although the loss of Myer is likely to affect that valuation. ISPT Core Fund is majority owner at 75 per cent.
In a joint statement today, Vicinity and ISPT say they are 'investigating a number of options for the centre including a downsized contemporary department store and plans without a department store which we can now progress with certainty'.
"We look forward to delivering a reimagined destination in the heart of Brisbane’s evolving CBD and anticipate sharing our plans shortly," the statement says.
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