Shares in Intu have dropped more than 20% after the Trafford Centre owner revealed the toll the retail crisis is taking on its business.
Net rental income for the six months to June 30 was down 7.7% on a like-for-like basis to £205.2 million, driven by the impact of administrations and store closure programmes.
Chains including LK Bennett, Bathstore, Select, and Pretty Green have entered administration this year, resulting in store closures.
Meanwhile, Topshop owner Arcadia, Monsoon Accessorize and Debenhams are among those to have sought a Company Voluntary Arrangement (CVA) allowing them to pay lower rents and shut unprofitable sites.
The physical store is not dying, it is evolving. The right store in the right location still plays a vital role in retailers' multichannel strategies and we are starting to work with them as partners sharing the risks and rewardsMatthew Roberts, Intu
Intu’s property portfolio took a hit to its valuation, declining by 8.8% to just under £8.4 billion. Its revaluation deficit widened to £872.1 million, compared with £650.4 million this time last year.
New chief executive Matthew Roberts, who took over as chief executive in April, said: “We have experienced further downward pressure on like-for-like net rental income and property values resulting from a higher level of administrations and CVAs as some retailers struggle to remain relevant in a multichannel world.”
He added that, following a review of the business, Intu has developed a five-year strategy to tackle changes in the industry.
“Regardless of current sentiment, one thing is clear: the physical store is not dying, it is evolving. The right store in the right location still plays a vital role in retailers’ multichannel strategies and we are starting to work with them as partners sharing the risks and rewards,” said Mr Roberts.
Investor spirits were low following the update, with Intu shares dropping 21.4% in early trading.
Analysts at Liberum called it an “awful” first half and said: “With no sign retail pressure is easing and full disposals proving hard to achieve, there is little we believe management can do to ease pain in the near term.”