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Why the Westfield Corp Ltd share price is sinking

Credit: James May

The Westfield Corp Ltd (ASX: WFD) share price has plunged 17.4% in the past three months, from around $9.30 to trade at $7.68 currently.

It’s not the only shopping centre A-REIT that has seen its share price sink. Vicinity Centres Re Ltd (ASX: VCX), Scentre Group (ASX: SCG) and Shopping Centres Australia – or Shopping Cntrs Austrls Prprty Gp Re Ltd (ASX: SCP) are down 15.4% and 9.8% over the same period.

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is down much less over the same period, falling just 2.5%.

As the owner and developer of shopping malls, Westfield is perceived to be under pressure from retailers leaving those centres, thanks to pressure on them from US retail giant Amazon.

SumoSalad has reportedly threatened to close 14 stores on top of the two already in administration – that are in shopping malls branded as Westfield – but managed by Scentre Group, unless rents are reduced, and it’s likely not the only retailer.

Westfield concentrates on building and developing shopping centres and malls outside of Australia, including the UK (24% of assets) and US (74%). That would make you think the company faces less risk from Amazon than its Australasian peers like Scentre Group. That would be a grave mistake, as Westfield’s malls in the US and UK likely also face similar threats.

Foolish takeaway

Personally, I’d be avoiding Westfield and the other landlord stocks like Scentre Group until the dust settles once Amazon has arrived in Australia and had some time to ramp up to full scale. If you want dividend stocks, there are certainly several options out there like the ones below.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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