Westfield owner Scentre lost $3.7 billion in 6 months as retailers struggled through the pandemic

Australian shopping centres emptied out in the middle of 2020. (Asanka Ratnayake, Getty Images)
  • Scentre profits have swung $5 billion into the red in the space of 12 months after downgrading the value of its Westfield centres.
  • As a result, the retail empire produced a $3.7 billion loss for the full year to December.
  • Rents also took a hit, with rents falling to just 70% in the first half of 2020.
  • Visit Business Insider Australia’s homepage for more stories.

The commercial property empire has reported a multi-billion loss as retailers go through one of the largest upheavals in recent history.

Scentre, which the 42 Westfield complexes that dot Australia and New Zealand, reported a $3.7 billion loss over the twelve months to December.

The result marks an astounding reversal in fortunes, amounting to a $5 billion swing into the red after the company produced a $1.2 billion profit this time last year. The rout was largely driven by a staggering $4.2 billion write down in the value of Scentre’s assets.

As an online shopping boom produced some bumper results for individual retailers, as Australians splashed government stimulus while in self-isolation, the value of bricks and mortar shops has deteriorated.

The divergence has seen companies like JB Hi-Fi report record sales of almost $5 billion, while Scentre is forced to swallow multibillion-dollar losses.

“2020 was a challenging year and I am proud of how our people adapted to the conditions, leading the industry and our business. We were proactive and deliberate in the decisions we made,” Scentre Group CEO Peter Allen said.

According to Allen, the loss comes despite Scentre’s push into contactless shopping, trialling “a number of initiatives, such as aggregated ‘click + collect’”.

Despite the loss, Scentre said 98.5% of its retail spaces remain occupied. However, the pandemic took a significant bite of rents, with the company collecting just 70 cents on the dollar between January and June, back up to 93 cents in the second half of the year.

Curiously, with the losses largely contained to the company’s asset book, the company says it didn’t accept any government handouts to subsidise the thousands of employees on its payroll.

“We did not receive any financial support from the Australian or New Zealand governments, including the JobKeeper program,” Allen said.

That’s more than can be said for many companies, with only a small group opting to pay JobKeeper back after recording significant profits.

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