URW, the shopping mall giant, has released its third-quarter results, showcasing a positive trend in improving malls and a continued recovery in the fashion industry. The reopening of physical stores in mainland Europe has contributed to the ongoing recovery, with tenant sales at European centers increasing by 6% compared to the same period last year. These sales have also reached 92% of 2019 levels, indicating that shoppers who are visiting malls are making more purchases.
Examining individual countries, footfall in France reached 81% of 2019 levels in Q3, with tenant sales at 91.2%. In the UK, footfall stood at 75.2%, with tenant sales at 80.1%. Germany recorded footfall at 80.2% and tenant sales at 90.1%. In Spain, footfall was at 79.4%, with tenant sales at 85.6%.
The recovery in the US has also gained momentum in Q3, with tenant sales reaching 102% of 2019 levels. At flagship malls located outside major city centers, tenant sales increased by an impressive 108%. URW also reported significant leasing activity, with 518 deals in the quarter, bringing the total for the year to date to 1,736 deals. This represents a 23% increase compared to 2020 and is on par with 2019 levels.
The company saw improvements in rent collection, with Q3 reaching 88%, compared to 78% in Q1 and 80% in Q2. Overall vacancy levels also improved, falling to 7.9% in the second half, compared to 8.9% in the first half. Vacancies in the US dropped from 14% to 11.8%, while in Europe, they decreased from 5% to 4.9%. The UK also experienced improvement, with vacancies declining from 12.2% to 11.8%.
Adjusted recurring earnings per share for URW are expected to be at least €6.75, slightly higher than in 2020, adjusted for disposals. However, the company still faces challenges. Total turnover fell by 15.6% to €1.61 billion in the first three quarters, with shopping center turnover down 11.9% to €1.248 billion. Shopping center gross rental income also experienced a 14% decrease to €1.612 billion for the nine months.
Despite these challenges, URW remains optimistic, attributing the declines to restrictions during the first half of the year. While it did not provide specific figures for Q3, the company indicated that the performance could have been much better.
Germany faced the largest negative impact, with a decline of 28.9% due to longer and more impactful Covid restrictions in the first half. France saw a decline of 25.8%, driven by the disposal of five French assets in 2020. The UK also experienced an 8.2% decline. However, Austria and the Netherlands partially offset the negative performance, with growth rates of 16.2% and 14.5%, respectively, thanks to the opening of Westfield Mall of the Netherlands.
In terms of retail categories, URW highlighted that the top-performing categories in Europe during Q3 compared to 2019 were Jewellery (+1.1%), Sport (-1.5%), Home (-4%), and Health and Beauty (-4.1%). The fashion category, although the largest, showed an improving trend with a decline of 11.7% compared to 16.4% in June.
In the US, the strong recovery in sales was particularly noticeable in the Luxury (+46.6%), Gifts (+27.3%), Home (+26.3%), Sport (+26.2%), and Jewellery (+26.0%) categories in Q3. Fashion sales even exceeded pre-Covid levels, with a growth of 2% compared to a decline of 4% in June. The newly opened Westfield Mall of the Netherlands also enjoyed a successful quarter, attracting 1.2 million visits per month.
Overall, URW’s third-quarter results highlight a positive trend in improving malls and a continued recovery in the fashion industry, especially in the US. While challenges remain, such as the decline in total turnover and ongoing restrictions, the company remains optimistic about the future and is focused on driving further growth and success.
Links:
– URW Official Website
– Reuters Article: Unibail-Rodamco-Westfield books 550 million euro net loss as pandemic hits sales, rent waivers
