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Hammerson points to shopping centre shift away from high street fashion and towards brands and food

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Cabot Circus shopping centre in Bristol
Cabot Circus shopping centre in Bristol
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Hammerson points to shopping centre shift away from high street fashion and towards brands and food

Hammerson today pointed to a shift away from high street fashion brands and towards direct-to-consumer brands, aspirational fashion and food and drink in its shopping centres.

 

The retail and commercial property developer and operator said, in half-year results, that 92% of new UK flagship leases during the six months to June 30 had been signed with non-fashion or food and drink brands. While total UK flagship rent from new leasing fell by 1% compared to previous passing rents, the share from high street fashion fell by 25%, while consumers brands, aspirational fashion and food and drink were together up by 27%.

 

Hammerson pointed to key trends in the retail space that were influencing its strategy and included the move to online – a move being felt particularly strongly by fashion brands – the importance of the experience, the sales outperformance of luxury goods, and the outperformance in thriving cities.

 

Footfall to its centres rose in its UK (+0.5%), French (+0.5%) and Irish (+0.6%) markets. However, sales at its centres fell by 2% on a same-centre basis. Sales and footfall were also up in its value retail (+11% sales) and VIA outlets (+10%).

 

David Atkins, chief executive of Hammerson, said: “The UK retail landscape is undoubtedly challenging and traditional high street fashion is under pressure. However, our focus on shifting our line-up towards categories with greater customer appeal and rental growth potential has resulted in over 90% of new leasing to leading consumer and F&B [food and beverage] brands. We’ve seen a stronger performance in Ireland and France, alongside continued exceptional results from premium outlets which demonstrates the benefits of our diversified portfolio.”


The retailer has sold 75% of French shopping centre Italie Deux and its Italik extension for £423m, in a deal which helps it to meet its target of selling properties worth £500m during the year in order to tackle debt. So far it has raised £456m from disposals. It now plans to sell UK retail parks over the medium term, having sold parks worth £33m in the first half.

 

“Our absolute priority remains to reduce debt,” said Atkins. “We stated our intention to achieve over £500m of disposals in 2019 and even in this tough environment where deals are taking longer to transact, we are now most of the way there. We will continue to pursue additional sales throughout 2019 and into 2020 to further strengthen our balance sheet.”

 

Hammerson, whose shopping centres include Cabot Circus in Bristol, the Bullring in Birmingham and Union Square in Aberdeen, reported net retail income of £156.6m in the half-year. That’s 12.3% down on the previous year. It reported losses of £319.8m in the half-year, from a profit of £55.7m last time. The value of its portfolio fell by 4% to £9.5bn.

 

The property group said that in the first half of the year, 10 of its UK retailers either went through a CVA (company voluntary agreement) in order to close shops or reduce rents, or went into administration. That affected 45 shops with rents of £8m. Overall that resulted in a £1.1m reduction in passing rent. Since the beginning of 2018, it said, 100 units have been affected by CVAs or administrations, and 74% are currently trading.

 

Image courtesy of Hammerson

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