In response to disappointing half-year results and challenges in the retail market, Hammerson, a leading retail property firm, has unveiled a new strategic direction geared towards prioritizing premium outlets over department store space. This shift in focus aims to not only appease investors but also enhance the company’s overall performance in a challenging retail climate.
The decision to decrease exposure to department stores and high street fashion retailers was prompted by a significant 80% profit decline to £55.8m. Hammerson attributes this downturn to the volatile retail market and a series of Company Voluntary Arrangements (CVAs) leading to closures within its property portfolio.
As part of the strategic update, Hammerson intends to exit the retail parks sector and aims to achieve £1.1 billion in disposals by the end of 2019. Notably, recent sales of retail parks in Bristol and Kirkcaldy have already contributed £300 million towards this target.
Looking ahead, Hammerson plans to place a strong emphasis on flagship retail destinations and premium outlets, which are perceived to be more resilient in the face of fluctuating consumer preferences. CEO David Atkins emphasized that the company will strive to offer a more diverse retail mix, encompassing differentiated brands, aspirational fashion, leisure, events, and lifestyle spaces.
To drive profitability, Hammerson intends to reduce department store space by 25% and high street fashion space by 20%. The freed-up space will be repurposed to introduce new brands and experiences tailored to meet evolving consumer expectations.
Hammerson’s restructuring decision follows the collapsed acquisition of Intu and the rejection of a takeover bid by Klepierre. In addition, the board of directors is set for changes, with a reduction in executive directors and key executives planning to retire or step down in the near future.
Ultimately, Hammerson’s renewed focus on premium outlets and flagship retail destinations demonstrates its commitment to adapting to the ever-evolving retail landscape and providing a more engaging and profitable shopping environment for both consumers and retailers.
For further information on Hammerson’s strategic shift and retail industry trends, click here. To learn more about the impact of CVAs on the retail sector, visit this resource.
