SCentre Cancels Dividend & Sacks D&C Workforce

10 May 2020

SCentre has announced it will not pay an interim distribution for the Half Year ending 30 June 2020 has also reduced 60% of the Design and Construction workforce as it grapples with a loss of customers & earnings.


The uncertainty regarding the pandemic, its duration and the economic impact is taking a toll on the retail giant and its tenants. The impacts have still not been fully realised however the immediate focus of returning retailers and customers to a safe environment has begun.


SCentre said that they were committed to supporting the reopening of the economy as more retailers continue to reopen their store networks and engage with customers. So far, 57% of retailers in the Australian portfolio representing 70% of gross lettable area are open, with more retailers scheduled to reopen over the coming weeks.


The damage to the business peaked in April with customer visitation down across March and April by -60% on the previous year. As more retailers have reopened in recent weeks, Scentre has seen an increase in customer visitation and most significantly over this last weekend there was double the level of visitations from 5 weekends ago.


Retailer in-store sales grew during January and February 2020 however as were impacted in March 2020 as COVID-19 government restrictions were implemented (mostly from 22nd March). Comparable specialty in-store sales were down -25.9% for the March 2020, Supermarkets traded 20% higher and total Majors stores were down -2.3%.


The Group has agreed to defer construction of the rooftop entertainment, leisure and dining precinct (with support of JV partner Dexus) but will continue works on the new entertainment, leisure and dining precinct at Westfield Doncaster and the downsizing of the Myer store at Westfield Belconnen.


SCentre are reviewing the timeline of pending redevelopments and will provide an update at the half year but have elected to reduce more than 60% of the D&C workforce, while retaining key capabilities in order to the aligned with the reduced level of active redevelopments.


In April, the Group increased liquidity to $3.1 billion and has extended all bank facilities that were due to mature in 2021 and now has no bank debt maturing until January 2022 with approximately $1.9 billion of bonds maturing during that period. The Group believes that retaining this capital will further strengthen its financial position and ability to continue to deliver long term returns to its securityholders.