House of Fraser and New Look woes dent values at Intu but firm stays upbeat
UK shopping malls giant Intu may have been cautiously upbeat as it issued its interim results, but there was no denying that retail is going through a tough time and the company’s CEO of 17 years, who announced with the results that he’s to step down, has had to navigate some choppy waters recently.
David Fischel is to leave once a successor has been found, having spent over three decades working at the company, with more than half of his time there seeing him in the top job and the key figure in driving its strategy.
But that strategy came spectacularly unstuck earlier this year as a much-heralded merger with Hammerson was cancelled when it turned out that Hammerson’s shareholders weren’t happy with the deal. Fischel had planned to leave once the merger had gone through but found himself staying on for longer to steer Intu through.
On Thursday, Fischel said: “During a period of weakening sentiment in the retail market which has impacted prime shopping centre valuations, Intu has delivered a resilient operational performance in the first half of 2018. This reflects the high quality of our business which was able to perform in a challenging retail environment.”
Chairman John Strachan also said Fischel had overseen “transformative events” in the company's history. And those events continued in the first half with one key development being the firm’s drop in net asset value (NAV) per share, a key measure of the value of Intu’s portfolio of shopping malls. The figure per share was down to 309p from 359p at the end of the previous half.
Fischel said that “the sentiment towards retail and retail property has been extremely negative, fuelled by a number of retailers, in particular New Look and House of Fraser, entering high-profile CVAs.
“While the direct financial impact on Intu from CVAs and administrations has been minimal, they have dampened the retail property investment market with our property valuations decreasing by 5.6% on a like-for-like basis, principally as a result of increased investment yield.”
So even though no HoF stores in Intu malls will be closing, the sentiment decline sent the listed company to a £507 million pre-tax loss having made a profit of £123 million a year ago. But its underlying earnings managed to stay flat at £98.5 million.
Like-for-like net rental income still rose, by 1.3% on the back of increased rents from new lettings and rent reviews, while footfall rates were reasonably robust, despite weather issues denting visitor traffic during the half. Footfall dropped only 1.3%, better than the ShopperTrak benchmark of a 3.3% decline.
With the company's malls outperforming the market and the firm being among the most active at introducing new experiences to its properties it looks likely to be one of those that benefit when the UK does eventually emerge from its current gloomy environment.
Copyright © 2023 FashionNetwork.com All rights reserved.