One million weekly London shoppers buoy Westfield

Buoyed by an impressive 17% jump in annualised Westfield London retail sales – and a record 1 million weekly visits –international shopping centre owner Westfield Group has confirmed its earnings forecast for the year to December.

Noting its global portfolio was performing strongly and sales of its non-core US malls were progressing, it has reaffirmed its forecast for a distribution per security of 48.4¢ and operational segment earnings of 74.6¢ per security.

Shares in the company have dropped nearly 20% this year, compared with a fall of 10% in the benchmark S&P/ASX 200 index as Westfield works its way through the challenging international retailing environment.

But Westfield notes demand for space remains solid especially in Australia, with a number of global retailers looking to tap into the market, although it recorded just 1.1% growth in specialty retail sales.

Occupancy remains above 99.5% in its Australian centres.

"Our job right now is not only to release the existing centres but to make space," Westfield co-chief executive officer Steven Lowy told a conference call for analysts and media as reported on Reuters.

With the non-core asset sale listings in the United States, Westfield said it was in negotiations with four to five parties to sell its US non-core shopping centre assets. There was 5.9% retail sales growth in its US stores.

"I do think the environment is in a position at the moment where those assets can get funded," noted Peter Lowy, another chief executive officer for Westfield.

"There is a quite a lot of money sitting around in bank balance sheets waiting to be deployed."

While some of Westfield’s peers have started share buybacks in hopes to lift their share prices, Peter Lowy says it's unlikely that Westfield would follow suit.

"Our preference as a company to invest in our products and increase the business, and increase return on equity by developing and growing the business," he adds.

“This was an exciting and active quarter for Westfield, with the immensely successful opening of our Stratford City project adjacent to the site of the London 2012 Olympics, together with concluding the £1.75 billion joint venture of the centre,” the Westfield press release noted.

“We are very proud of what we have achieved at Stratford City.

“This world-class shopping centre was delivered on time, on budget and over 95% leased at opening.

“More than 6.5 million customer visits have occurred in the eight weeks since opening, including over 1 million visits in the centre’s first week, a record for our company.” 

The million Westfield customers encountered quite a sight.

The group was also active in investing capital into high return opportunities during the quarter.

“Importantly, we announced the expansion of our business franchise into new markets including Brazil and the acquisition of a strategic development site in Milan, which we believe is the best major retail development site in continental Europe,” Steven Lowy says.

During the quarter, WDC reached an in-principle agreement on the US$1.3 billion joint venture of the retail premises at the World Trade Center in New York.

WDC also recently announced the sale of a half share interest in Cairns Central, Queensland for $261 million at a cap rate of 5.2%, representing a $35 million, or 16%, premium to book value.

It was the huge new Westfield mall in Stratford that smashed all records in its first week by attracting more than 1 million shoppers.

More than 6.5 million people have visited the Westfield Stratford City shopping centre in east London since it opened on September 13.