Solomon Lew: ‘Some Retailers Will Not Recover’
Premier Investments – which includes The Just Group, Portmans, Peter Alexander, Smiggle, Dotti and Jay Jays – has announced the start of its ‘store reopening and recovery phase’ following a difficult quarter. The group will open the majority of its Australian stores on Friday 15th May, aside from airport and some CBD stores, as there will continue to be low footfall in these areas.
The retail group opted to close all its stores from the 21st April until at least the 11th May, and as a result its total sales were down 74% year-on-year for the six weeks to 6th May.
However, Solomon Lew, who is the largest shareholder and Chairman of Premier Investments, has stated that the retail scene will not return to what it was anytime soon. “Without a doubt, there will be retailers who will not be able to recover from this… they were on the brink anyhow,” Lew told The Australian. “When I talk to the bankers they will tell you that it is a sector they are watching very closely and as much as they want to support, they can’t support.”
Echoing comments made by the CEO of the Precision Group Shaun Bonett yesterday, Lew believes that commercial property landlords and retailers will need to work together in order to ensure the sector as a whole survives. “There are a million odd people circling around in distribution, retail, transport, etc. and in manufacturing that could get back to work, but a lot of it will depend on the retailer negotiations with the landlords and there are many people who won’t come back into business.”
The country’s major commercial retail landlords have agreed to National Cabinet’s mandatory code of conduct on SME commercial leasing, which stipulated rent should be lowered in a proportional manner to loss of income from the COVID-19 pandemic. However, exact comprises between landlords and tenants are still being negotiated. “Everybody is looking to go on proportional rent,” Lew said.
Like Bunnings and Kmart, a number of Premier Investment’s brands witnessed a huge surge in online sales.
Online sales for Peter Alexander, which is the group’s largest online brand in Australia, are up 295%. In its Q1 2020 earnings report Premier Investments said: “Incredibly, during the week ended 2 May 2020, Peter Alexander Australia’s online sales alone were up 18% on last year’s total sales across both online and our entire 122 store and concession network in Australia.”
Moving forward, many shoppers will likely prefer online channels, so retailers may channel more of their investment in this area. Wesfarmers has confirmed they will be increasing investment to expand online retail capacity.