Local shopping centre owners are paying a high price to get the world’s biggest retail names in the door, with new financial results from Zara and H&M revealing sales per store softening rapidly as the pace of new store openings picks up.
Macquarie analysts are the latest to join a chorus questioning the high price shopping malls are paying for international retailers, with local apparel retailers bearing the brunt of the impact and losing shoppers to their flashier rivals.
In its most recent financial results, Zara recorded Australian sales of about $16 million per store during fiscal 2016, equating to about $10,700 per square metre, well down on the $42.8m in sales delivered in fiscal 2012 and the $25.8m netted the following year.
Zara, H&M and Uniqlo took about $502.7m in sales, which represents about 1.2 per cent of apparel and department store sales in Australia.
This is predicted to grow, with steep implications for local retailers and the returns profile of shopping centres.
“We remain concerned about the impact of international retailers in Australia factoring low price points, meaning domestic competitors cannot raise prices to offset the (cost of goods sold) impact of a lower Australian dollar,” analyst Rob Freeman said.
“Market share will increase to around 2 per cent in the next year, and with around 30 per cent of a regional mall’s income still typically derived from apparel retailers, we believe this will continue to place downward pressure on the performance of these businesses.”
The analyst noted that a recent tour of Chadstone revealed that three of the four new flagships had internal escalators funded by the landlord.
(Source: The Australian )