Scentre Group poised for retail return as COVID-19 restrictions ease

Scentre Group poised for retail return as COVID-19 restrictions ease

Around the country states are planning to ease COVID-19 restrictions, giving Australian retailers the confidence to reopen.

This is good news for the operator of Westfield centres, Scentre Group (ASX: SCG), as it remerges from the slowdown.

All 42 Westfield Living Centres remained open and trading during the quarter, but new life  is set to be injected over the coming weeks.

As of today 57 per cent of retailers in Scentre's portfolio are now open and trading, with "significantly more" expected to reopen over the coming weeks.

Scentre says it has seen an increase in customer visitation as more retailers have reopened.

Significantly, over this last weekend, there was double the visitation of just five weekends ago.

"All Westfield Living Centres have remained open throughout the pandemic. I am proud of the Group's focus on the health and wellbeing of our customers, retail partners and employees whilst maintaining business continuity and economy activity to the extent we possibly can," says Scentre Group CEO Peter Allen.

"Balancing these priorities remains our objective."

During the extended retail shutdown Scentre Group was slammed by retail giant Premier Investments (ASX: PMV) for its handling of the pandemic.

Premier Investments CEO Mark McInnes' was particularly critical of Scentre's hygiene standards.

"This issue is very real for Premier Retail - we have had two incidents in Scentre Group's Carindale mall where our team members were exposed to COVID-19-positive customers, and in both instances, when Scentre was notified, they took no action," McInnes alleged.

"We were made aware of these incidents by the affected customers themselves and the Queensland Health Department.

"We then notified Scentre, who to our knowledge took no steps to notify the other tenants, customers or the community of Carindale that positive COVID-19 cases had been shopping in the mall."

In a response, a Scentre Group spokesperson said its retail partners and centre management followed the correct Queensland Health protocols at Westfield Carindale.

"The Queensland Health advice was these individuals posed no risk to any customers, retailers or employees," the spokesperson said.

"As a precaution, the relevant retailers closed their stores temporarily for deep cleaning. Centre management also conducted additional cleaning."

The company increased its liquidity to $3.1 billion in April in response to the financial crisis. As a result of additional refinancing of bank facilities the amount of debt maturing through to December 20201 has been further reduced to $1.9 billion.

To mitigate the damage of COVID-19 Scentre implemented a range of initiatives targeting more than a 25 per cent reduction in centre operating expenses during the pandemic period.

These initiatives included a 20 per cent reduction in base Board fees, while the Senior Leadership team also agreed to a 20 per cent pay cut.

Across the group more than 80 per cent of employee's roles were adjusted, including moving to reduced remuneration of reduced hours. These arrangements will be reviewed in August 2020.

Scentre still doesn't expect to pay an interim distribution to shareholders for the half year period ending 30 June 2020, and the company's FY20 guidance remains suspended.

"The Group believes that retaining this capital will further strengthen its financial position and ability to continue to deliver long term returns to its securityholders," says Scentre.

Shares in Scentre Group are up 3.64 per cent to $2.28 per share at 10:20am AEST.

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