Scentre Group (ASX: SCG) has not received a lot of love in FY20 with the share price down 41.96% in the past 12 months. However, the share price has surged 5.99% today at the time of writing.
Retail stores are re-opening and customer visitations improving. Does it have a positive outlook?
Retail stores reopening and customer visitations improving
In a news publication released on its website yesterday, the group announced customer visitations have increased as stores re-open, illustrated by the table below:
|
|
May 2020 customer update |
June 2020 customer update |
|
% of retail stores open Australia |
80% |
92% |
|
% of retail stores open NZ |
93% |
94% |
|
% customer visitations for week ending 24 May 2020 (of the previous year) |
80% |
86% |
As can be seen above, retail stores are re-opening and customers are coming back to shopping centres. In Australia, 92% of retail stores are open in June 2020 compared to 80% in the May update. Additionally, in New Zealand, there has been an increase of 1% in retail stores open. Across the group, customer visitations are up 6% in June compared to May.
Scentre Group director of customer experience, Phil McAveety said, "the immediate uplift in customer visitation reflects our desire as social beings to engage with friends and family and experience products and services in person."
There is a shift in spending in line with the easing of restrictions and there is the expectation of a recovery in the businesses most impacted. An online and physical presence is complimentary to businesses.
Outlook
Retail sales increased 16.3% in May 2020 representing a significant rebound in the industry compared to April as restrictions have been eased across Australia. While it may be too early to be optimistic as the gains experienced in May is a rebound from the 17.7% fall in April, the positive customer visitations and the number of retail stores opening is heading in the right direction.
However, consumer confidence has declined according to ANZ-Roy Morgan. There is a risk this could impact the foot traffic in shopping centres over the coming months.
ANZ Senior Economist, Catherine Birch, commented:
"The surge in COVID-19 cases in Victoria has dented consumer confidence, which dropped 4.6% last week. This was the largest fall since late-March, when national new daily cases peaked…Unfortunately, new daily cases in Victoria jumped to 75 on Monday, the state's fourth-highest daily total since the pandemic began. This a worrying sign for confidence and a setback for the recovery."
Foolish takeaway
Scentre Group has shopping centres all around the country. The geographic diversification could help it withstand the second wave that is being experienced in Victoria right now. However, the fall in consumer confidence could impact the increase in customers returning to the group's shopping centres.
Personally, I would like to see more of a prolonged recovery in the retail industry before adding to my position in Scentre Group.
