Retail therapy works for Westfield

Sales and profit growth for the shopping centre king

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Westfield Group (ASX: WDC) shareholders will be pleased to see that rumours of the death of the consumer have been greatly exaggerated, with the company delivering a very strong headline net profit growth of 31% to $800m for the company's first half.

Much of that growth is due to accounting adjustments, with the more business-focussed 'funds from operations' giving a better sense of the company's ongoing earnings. On this measure, growth was a much more moderate 3.1% — still a strong result given the soft retail environment over the past year.

Westfield reiterated that it expected to deliver its full-year profit forecast and dividend of $0.65 from operations and $0.495 in distributions to shareholders.

Australia and New Zealand continue to be the strongest parts of Westfield's business, as you'd expect given our economies' escape from much of the worst of the GFC. The good news for the company is that it managed to deliver earnings growth (on a 'funds from operations' basis) in the United States and a flat result in the UK.

Remarkably, 'specialty store' sales growth for Wesfield's US centres was a very strong 8.7%, perhaps showing early signs of a US retail recovery.

Westfield also has a total development pipeline of $11 billion, of which the company will fund half (the remainder coming from development partners). $1.5b of those are due to commence in the second half of this financial year and the next full financial year.

Westfield shares have performed strongly this year, having rallied from just over $8.00 12 months ago and around $7.75 at the beginning of 2012, to be around $9.70 in early trade today.

The A-REIT sector as a whole has been enjoying a return from the depths of the GFC, with stable-mate Westfield Retail Trust (ASX: WRT), CFS Retail Trust (ASX: CFX), and Dexus Property Group (ASX: DXS) all joining Westfield in posting solid gains.

Foolish takeaway

Investors who expect retail to rebound could do much worse than investing in Westfield, especially given its exposure to the US and UK markets that will see a stronger rebound (given a larger fall in prior years), and to the growth markets of South America where Westfield is establishing a beachhead.

If you're in the market for some high yielding ASX shares, look no further than our Secure Your Future with 3 Rock-Solid Dividend Stocks report. In this free report, we've put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

More reading

Scott Phillips is an investment analyst with The Motley Fool. He owns shares in Westfield Group and Westfield Retail Trust. You can follow Scott on Twitter @TMFGillaThe Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691)

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »