Westfield retail partner sales jump $2.7 billion

Westfield retail partner sales jump $2.7 billion

Photo: Westfield Southland.

In the absence of the lockdowns that plagued retail during the same period in 2021, Westfield shopping centre owner-operator Scentre Group (ASX: SCG) has reported a 73 per cent spike in sales year-on-year for its business partners in the September quarter of 2022.

This equates to a $2.7 billion lift for those retailers and partners that benefited from the increased foot traffic.

Scentre Group CEO Elliott Rusanow says operating performance is strong with customers continuing to return to the company's "destinations", and business partners' growing at an increasing rate versus the first six months of the year.

"So far this year, we have welcomed 391 million customer visits, up 16.7 per cent on the same period last year, and we expect to achieve approximately 500 million visits this year," Rusanow said in an ASX update this morning.

"Since the start of this year our business partners have achieved over $18.4 billion of sales, an increase of $3.5 billion or 23.6 per cent more than the same period last year.

"On a comparable basis, our business partners have achieved 14.8 per cent more sales in the 3rd quarter compared to the same period in 2019, and for the 9-month period they have achieved 11.9 per cent more than in 2019."

Portfolio occupancy is also up by 30 basis points at 98.8 per cent with 200 new brands introduced so far this year. The group has completed 2,464 lease deals to date, including 1,547 renewals and 917 new merchants.

During the third quarter, $670 million in rent was collected, representing an increase of $235 million compared to the same period last year. This represents more than 100 per cent of billings.

Scentre Group reports its $355 million investment in Westfield Knox is progressing well, with the Stage 1 Fresh Food market due to open next month and the remainder of the development to be delivered throughout 2023.

These numbers from the country's largest shopping centre owner follow the Australian Retailers Association's (ARA) release of September statistics almost two weeks ago, which showed $35.1 billion was spent nationwide in stores and online in that month alone - a 17.9 per cent year-on-year increase.

The ARA reported the most significant rises by category in September were seen in clothing, footwear and personal accessories (up 70.4 per cent), cafés, restaurants and take away food (up 52.6 per cent) and department stores (up 53.6 per cent).

'It’s fantastic to see the momentum maintained as we head into the all-important Christmas trading period – a time when many of our discretionary retailers make up to two-thirds of their profits. Despite the challenging economic times, retail spending remains extremely healthy and that’s great news for retail and a positive sign for our broader economy," ARA CEO Paul Zahra said at the time.

"Whilst there is a lot to celebrate, we are mindful of the impact that inflation and higher prices have on these sales results – with year-on-year comparisons also strongly influenced by the hangover of the Delta lockdowns last year.

"We are cautiously optimistic about the months ahead, and the ARA forecasts a 3 per cent year-on-year increase in Christmas spending. We also know that for many small businesses, the sales are critical in replenishing cash reserves from the pandemic period so these results are truly welcome."

Earlier this week the ARA released its Black Friday sales forecast in collaboration with Roy Morgan, in anticipation of the four-day Black Friday/Cyber Monday weekend starting on 25 November.

The two entities predict an increase of $200 million in the retail event's sales over 2021 to hit $6.2 billion. 

Around a quarter (25 per cent) of Christmas shopping is completed in Black Friday week alone with a third already completed in the first three weeks of November according to Salesforce’s Holiday Insights Hub – showing how Australians love a bargain and are shopping earlier to avoid disappointment. The highest average discount rate (22 per cent) is likely to be seen during Cyber week.

"Many people are more conscious about their household budgets with the cost of living going up and interest rates on the rise, and 2023 is set to be a more challenging year with a slowdown expected to Australia’s economic growth. As it stands right now, strong consumer spending is set to continue over the festive trading period," Zahra wrote yesterday in his Retail Voice message.

The industry body representative also raised several other issues, including multi-employer bargaining legislation, climate change and worker shortages.

"On a Federal Government front, we remain focused on the Secure Jobs, Better Pay Bill. We are concerned about the short time frame and lack of business consultation surrounding the bill. This follows the concerns we have raised about multi-employer bargaining for some time," he said.

"On the global stage, the Federal Government is highlighting Australia’s climate credentials ahead of the United Nations COP27 Climate Change Conference starting in in Egypt in a few weeks’ time. In line with this COP milestone event, we’d remind members of the UN-backed ARA Race to Zero campaign, which calls on retailers everywhere to take ambitious action on climate change. 

"The ARA continues to advocate for short and long-term measures to address profound worker shortages and it’s pleasing to see the Government extend the Pensioners Work Bonus increase to 31 December 2023. Government has listened to the ARA advocacy and seniors’ groups. The scheme will give pensioners more choice over when they want to work or use this credit. At $4,000 a year, the amount granted in this program, means pensioners can work 3-3.5 hours more per week before payments will be decreased."

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