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Capital Shopping Centres reports growth despite challenging retail environment. In its first set of results

since the purchase of the Trafford Centre, CSC has reported an encouraging set of results. Although occupancy is down since January 2011, it remains high at 97 per cent, and the company’s 14 centres have repcorded continuing footfall growth, up 3 per cent for the third consecutive year. In the first half of 2011 CSC

struck 80 long term lettings securing £5m in additional rent. However these tended to be below ERV, reflecting the balance of power between landlords and tenants. The Trafford Centre is

performing strongly post acquisition with footfall up 8 per cent and it has been integrated into the group’s overall activities. A strong growth area for CSC has been the increase in requirements for catering space. Catering operators now account for 8 per cent of CSC’s total rent and some 370 units out of CSC’s 2,400. With current deals being struck at higher levels, the aggregate rent of catering units across all CSC centres now averages £43 per square foot. Chief executive David

Fischel said: “With 6 per cent growth in like-for-like net rental income and increased footfall at our centres, CSC has delivered a sound operating performance in the first half of 2011. The Trafford Centre has proved an excellent addition and the group has a range of active management projects and extensions in the pipeline to deliver future growth. Although the economic environment remains challenging, large centres such as those owned by CSC with a strong catering and leisure component are continuing to outperform.”


0.6 per cent higher on a like-for- like basis from July 2010, when sales had risen 0.5 per cent. On a total basis, sales were up 2.5 per cent, against a 2.6 per cent increase in July 2010. Food sales growth picked up in July after a poor June. Clothing and footwear also picked up, helped by clearance sales. Homewares were mostly down and often promotion-led. Consumer caution continued to hit big-ticket housing-related purchases. Internet, mail-order and phone sales growth slowed after June’s clearance-led uplift. Sales were 9.6 per cent higher than a year ago, compared with 11.5 per cent in June and 11.3 per cent in July 2010.

Stephen Robertson,

director general, British Retail Consortium, said: “This is a modest improvement on recent months but overall conditions remain very difficult for retailers. When you take into consideration inflation and January’s increase in VAT, 2.5 per cent growth effectively means people are buying fewer goods. “Food sales continue to

outperform non-food with inflation helping to drive top- line growth. But shoppers were only tempted into stores by


an unprecedented number of promotions which come at the expense of margins. Sales of non-food goods barely grew, though clearance events helped summer clothing in particular. “Growing fears of a global

economic slowdown and a sovereign debt crisis have sent shockwaves through financial markets. Policymakers in Europe and the US must act quickly to implement a coordinated and credible strategy to reduce public sector deficits while supporting growth. Business and consumer confidence needs to be restored quickly before spending paralysis sets in.” And Helen Dickinson, head

of retail, KPMG, said: “July was a better month than June, seeing an improving trend for the food sector and an uplift for clothing when the good weather finally kicked in. However, retailers of big-ticket items continue to find the market conditions challenging, with customers still reluctant to make major spending commitments. “With pay rises hard to come

by, consumers continue to feel the squeeze of higher prices and an uncertain outlook. Retailers are hunkering down and managing stock tightly and none is particularly optimistic about the outlook, although many

RETAIL SALES VALUE: Percentage change year-on-year 2009

January February March April May June July


September October

November December

January – July average January – December average

Like for like 1.1

-1.8 -1.2 -1.5

-0.8 1.4 1.8 0.1 1.6 3.8 1.8 4.2 0.2

-0.8 Source: BRC-KPMG RSM (food & drink data from IGD)

Total 3.2 0.1

0.6 6.3 0.8 3.2 3.6 2.2 3.7

5.9 4.1

6§ 2.7

1.6 2010

Like for like -0.7 2.2 4.4

-2.3 0.8 1.2 .5

1.0 0.5 0.8 0.7

-0.3% 0.7 1.4

Total 1.2 4.5 6.6

-0.2 3.0 3.4 2.6 2.8 2.2 2.4 2.8

1.5% 2.5 3.3

-0.4 -3.5 5.2


-0.6 0.6

expect inflationary pressures to decrease in the latter part of the year.” Looking at individual sectors,

food sales growth picked up in July after a poor June. Shoppers on tight budgets continued to search out value lines and promotions. Cheaper options such as slow-cook meats benefited, and home-baking also showed an uplift. Premium lines did well where people traded down from dining out and meal deals remained popular. Sales for clothing rose

above their year-earlier level after two months of decline. The improvement was led by womenswear, while growth in men’s and children’s was slower than in June. Extended clearance sales helped, though at the expense of margins. Overall footwear sales

returned to growth after two tough months of decline. But sales were often discount- driven, with aggressive markdowns in extended clearance events to tempt cautious consumers. Underlying trade for electrical

products was little changed from June, as the weak housing market and tight household budgets meant consumers remained cautious and actively sought out good deals.


Like for like 2.3

Total 4.2 1.1

-1.9 6.9

-0.3 1.5 2.5


2.8% August 2011 SHOPPING CENTRE

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