Billionaire retail mogul Solomon Lew has threatened to close 'many' stores if landlords do not provide assistance to tenants, as reported by the Australian Financial Review (AFR). Lew's company, Premier Investments Limited (ASX: PMV) has closed 2 stores in Hong Kong due to the coronavirus crisis and Lew says "we are prepared to close many more stores globally if landlords do not respond to the current crisis."
Shares in Premier Investments went into free fall this morning, losing more than 25%. Shares have now fallen nearly 60% from February and are currently trading at $8.92, down from over $21 in mid-February.
Trade disrupted
Premier Investments' brands include Just Jeans, Portmans, Dotti, Peter Alexander, and Smiggle. Trade across its stores has been severely disrupted since the announcement of the coronavirus pandemic. Trade in all brands in Australia and New Zealand has been impacted as tourist sales, which have historically been supported by international students, have slumped.
Fashion jewellery and accessories retailer Lovisa Holdings Limited (ASX: LOV) has also been forced to close stores, with all stores in France and Spain closed since Sunday 14 March, and all Malaysian stores closed since 18 March. Lovisa currently also has 25 stores closed or closing across the US as a result of local government directives for shopping malls to close.
According to Premier Investments, landlords, "have a major role to play to ensure retailers can operate in the short term for the long term benefit of all stakeholders." The company has closed 33 stores in the last 12 months and 134 over the past 7 years. It says it will continue to close stores where landlords do not adjust rent expectations in accordance with shifts in consumer behaviour.
Landlords feel the pressure
Meanwhile shopping centre owner Vicinity Centres (ASX: VCX) has withdrawn its earnings guidance, warning retail trade is slumping due to coronavirus. Vicinity owns 59 centres across Australia, including Chadstone in Victoria and Chatswood Chase in Sydney.
Vicinity CEO Grant Kelley said, "since announcing our interim results in mid-February, we have seen a further deterioration in the retail trading and operating environment, with increasing uncertainty around the impacts of COVID-19."
Scentre Group (ASX: SCG) has also withdrawn its guidance in light of the coronavirus pandemic and volatility in markets globally. Scentre Group is behind Westfield branded shopping centres. The group has offered a minor concession to retailers, saying it will work with them in the current pandemic crisis.
As coronavirus spreads, shopping centres have turned into ghost towns. Already battered by the bushfires, retailers are now seeing sales evaporate with tourists barred from entering the country and locals pulling back on spending. The one exception, of course, is supermarkets, which have been the site of extraordinary scenes as panic buying takes hold.
