Westfield Group's (ASX: WDC) strategy to strengthen its portfolio by redeveloping its most iconic stores seems to be working with some of the world's largest retailers lining up to be a part of the company's much anticipated World Trade Centre (WTC) mall.
The mall, located in New York, is set to open at some stage next year and is reportedly attracting some huge names. While it is believed that Michael Kors, Apple and Victoria's Secret have already signed leases at the centre, other big names like Tiffany, Giorgio Armani and Tom Ford are also expected to take out some of the most sought after stores.
Although Westfield's earnings are currently coming under pressure, given their various divestments from assets they considered to be non-core, the long term is looking far brighter. A more decked out and attractive shopping destination which boasts some of the most prestigious brands on the planet is sure to attract far greater foot traffic than any of its smaller stores ever could. What's more, as the store's popularity increases, it will also be able to increase the rent it charges, which will help boost earnings in the long run.
While Westfield Group might enjoy a dominant market position and a steady income stream from its Australian and New Zealand platforms, it can be concluded that the group sees greater opportunities ahead in countries like the US and UK. Indeed, the company has proposed to spin-off these assets to form Westfield Corporation while its local assets would be merged with Westfield Retail Trust (ASX: WRT) to form Scentre Group.
The WTC mall isn't the company's only focus either. Its two most iconic stores in the UK, namely Westfield London and Croydon, are also shaping up to be enormous revenue generators for the company which should attract retailers of a similar prestige to the WTC mall. The company could also look to expand in Brazil, Italy or even through Asia – there is literally a world of opportunities.
Foolish takeaway
Investors in Westfield often look to US shopping mall giant Simon Property's results for an indication of how the US division is performing. After releasing its results for the first quarter of 2014, the company boosted its guidance and increased its dividend, saying that overall business conditions are positive and that demand for space remains strong. The US economy (along with the UK economy) is in recovery mode, and Westfield Group has excellent exposure to both.
