‘Lack of Clarity’ as Retail Confidence Plummets

Westfield owner Unibail-Rodamco-Westfield has shelved its earnings guidance and cut dividends in half as commerce globally grinds to a halt.

Mall owners and retailers have been devastated by the sudden and unprecedented effects of the Covid-19 pandemic.

The latest market update from Unibail-Rodamco-Westfield comes as British prime minister Boris Johnson announced a strict nationwide lockdown in a bid to stop the outbreak. Many expect similar measures may be implemented in Australia in coming weeks.

Consumer confidence plummeted nearly 28 per cent last week—its largest one week fall on record and remains 17 per cent below the lowest point recorded during the global financial crisis.

In yet another blow to the retail sector, the ANZ-Roy Morgan confidence index showed that the “time to buy a major household item” category fell by 37 per cent.

Unbail said that there is a lack of clarity about whether further measures may be deployed and “significant uncertainty about the duration and impact of the Covid-19 pandemic on the operations of the group”.

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“[Unibail-Rodamco-Westfield] withdraws its 2020 guidance and expects to provide an update on its guidance when it can reliably estimate the duration, severity, and consequences of the current situation.”

The French retail giant confirmed strong liquidity of €10.2 billion in cash on hand as the coronavirus pandemic escalated last week—reassuring investors it had the funding to cover even an extreme “stress test” scenario.

To satisfy its REIT distribution obligations, Unibail will pay an interim dividend of €5.40 per share next week. The retail giant had previously proposed a share dividend of €10.80 on 12 February.

ASX-listed mall landlords Scentre, Vicinity, Home Consortium and Charter Hall’s Retail REIT have all moved to withdraw earnings guidance over the last week.

Uncertainty in regard to the implementation of social distancing measures and definition of “non-essential” services has further clouded the outlook for many retailers.

“We are currently awaiting guidance from government around the ‘essential products and services’ that shopping centres provide,” Vicinity chief executive Grant Kelley said.

“If put in place, ‘essential services’ within our centres would remain open to enable the community to purchase and access products and services, including: fresh food, household items, medical services, banking and any other items deemed essential.”

Prime minister Scott Morrison confirmed that shopping centres will remain open following a national cabinet meeting on Tuesday.