Owner of Westfield shopping centres sees profits dive by $3BILLION thanks to the coronavirus pandemic - just after boarding up 129 shops because big retailers are struggling to pay rent
- Westfield records $3.6billion loss amid COVID pandemic and reduced rents
- Fashion retailer Mosaic Brands will close up to 500 stores across Australia
- Two companies are in a dispute over rent costs and Westfield closed 129 stores
The owner of Westfield shopping centres across Australia has recorded a $3.6billion loss, as malls struggle with rent freezes and a steep drop in footfall throughout the pandemic.
Scentre Group last week boarded up 129 stores following disputes with businesses, including the embattled Mosaic group, about the price of rent.
When releasing the half-year results on Tuesday, the shopping centre giant also placed the blame on the plummeting value of property assets throughout the COVID-19 crisis.
For the six months ending June 30, a total statutory loss of $3.6billion was recorded - slumping by $4.4billion compared to the mid-2019 figures.
Scentre Group also reported a $281million fall in operations earnings, a direct result of the rent reductions for struggling businesses throughout the pandemic.
The owner of all Westfield shopping centres in Australia has recorded a $3.6billion loss (pictured, a flagship centre in Sydney's CBD)
Stores have spent entire months closed as a result of the pandemic and lockdown
Chief Executive Peter Allen said the business had provided relief to 2,438 of 3,600 retailers nationwide.
'We acknowledge that this has been a difficult time for our customers and our retail partners,' he said.
'We have supported our retail partners throughout this period on a case-by-case basis.
'We have done this without receiving financial assistance from government.'
In total, the company has provided approximately $1.6billion in support throughout the pandemic.
The devastating losses were announced just hours after Mosaic Brands announced it would close up to 500 stores across Australia after being 'utterly derailed' by the pandemic.
Westfield posted signs to encourage social distancing at the height of the pandemic as footfall fell significantly during the crisis
Mosaic Brands chief executive Scott Evans said it had reported a statutory loss before tax of $212.1 million, a 1,900 per cent decline on the prior year's profit (pictured, one of its stores)
Mosaic, which owns Noni B (pictured), Rivers, Millers and Katies, made the announcement to shareholders while delivering its full-year results on Tuesday
The company, which owns Noni B, Rivers, Millers and Katies, confirmed the decision to shareholders while delivering its full-year results on Tuesday.
Mosaic has been one of the hardest hit by the pandemic as it has an older customer base.
While all retailers have felt the brunt of the pandemic, those with a younger demographic saw their online sales increase.
Mosaic's online sales grew by just 14.7 per cent for the past 12 months while others more than doubled.
Chief executive Scott Evans said the company had reported a statutory loss before tax of $212.1million, a 1,900 per cent decline on the prior year's statutory profit of $11 million.
The company, which has 1,333 stores across the country, will close between 300 and 500 stores over the next two years, the Sydney Morning Herald reported.
About 400 Mosaic employees will be impacted by the closures and have been redeployed to other stores
Mr Evans said almost half of their leases were on holdover, and 81 per cent would expire in the next two years.
'There is no road map to navigate these circumstances, but our operational priorities have been ensuring team and customer safety, reducing inventory and maintaining a strong cash position,' Mr Evans said.
'This has allowed us to reshape Mosaic to take advantage of the fundamental changes happening in retail.'
All Mosaic owned stores within Westfield centres are already temporarily closed after the shopping centre boarded up 129 stores due to a rental dispute.
Retailers either refused to pay rent during coronavirus lockdown or negotiated to pay a lower amount, The Daily Telegraph reported.
Mosaic had reportedly been paying the shopping centre empire a lower percentage of rent during the COVID period and were trying to come to an agreement moving forward.
| State | April | May | June | July |
|---|---|---|---|---|
| NSW | 15.8 | 13.5 | 10.4 | 8.5 |
| VIC | 14.6 | 13.1 | 11.7 | 10.5 |
| QLD | 15.1 | 15.2 | 12.1 | 11.4 |
| SA | 15.3 | 13.7 | 11.2 | 9.8 |
| WA | 14.4 | 14.4 | 10.7 | 9.8 |
| TAS | 14.1 | 14.5 | 10.8 | 7.9 |
| NT | 11.2 | 11.3 | 12.3 | 12.1 |
| ACT | 9.8 | 8.3 | 6.2 | 5.2 |
| AUSTRALIA | 14.9 | 13.9 | 11.2 | 9.9 |
| Source: Treasurer Josh Frydenberg | ||||
Scentre Group reportedly did not approve of the offer which was tabled and instead demanded payment for outstanding rent.
Mosaic said all team members had been redeployed and are receiving the company's support amid the store closures.
Luggage retailer Strandbags has also been locked out of 38 stores by Scentre Group.
A Scentre Group spokesperson would not comment on the rental disputes.
'We work with each of our retail partners on a case-by-case basis,' the spokesperson said.
'We don't comment on commercial arrangements with our retail partners.'
During the nationwide lockdown in March almost 500 million jobs were destroyed, most were in the hospitality and retail sectors.
Australia's official unemployment rate stood at a 22-year high of 7.5 per cent in July.
A Treasury analysis, however, showed the 'effective unemployment rate' - which also includes workers receiving $1,500 a fortnight JobKeeper wage subsidies to stay home - was 9.9 per cent.
Across most of Australia this real level of unemployment, taking into account those who have a job but are working zero hours, has fallen since April, during the first full month of lockdowns.
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