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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 07​​ July, 2017

Record profit for Dixons Carphone

Dixons Carphone has announced record full year profits, exceeding £500m for the first time. Profits rose 10% to £501m in the year to April 29. LFLs in the UK and Ireland rose 4%, while total sales in the region rose 2% to £6.5bn. Total sales for the entire group rose by 3% to £10.5bn. Also reporting positively is Primark, who has seen a 9% jump in UK sales in the 40 weeks to June 24, helped by new store openings in locations including Llandudno and Uxbridge. Q3 sales increased 15% at constant currencies, helped by the recent good weather. Primark’s owner, AB Foods, highlights that the strong quarterly sales were helped by Primark’s low-cost fashion, which attracts otherwise increasingly cautious shoppers, as inflation rises.

Elsewhere, LFLs at Superdrug rose 7.8% in 2016, while total sales jumped 10.4% to £1.2bn. Online sales surged 60%, while pre-tax profits increased 41% to £80.4m during the period. Superdrug’s owner, AS Watson has revealed an expansion plan for its brands, as it continues to invest in the UK, despite increasing pressure on UK high street retailers. Superdrug is set to open 30 new stores, while Superdrug’s sister brands Savers and The Perfume Shop will open 45 and 17 new stores respectively.

Finally, the UK shopping centre market witnessed just 15 transactions in H1 2017, according to JLL’s Shopping Centre Investment team. Total deal volume was £1.168bn, down 24.2% on the £1.49bn from the same period in 2016. Of these transactions, all of them except two were 2016 transactions that completed in 2017. However, good buying opportunities may emerge in the secondary shopping centre investment market in H2 2017. James Waldock, Director in JLL’s Shopping Centre Investment team, commented: “There will be some interesting secondary buying opportunities in the second half of the year where good convenience assets have been labelled under the secondary banner. We believe that selectively there is value in this market where rents have been re-based, there are strong tenant renewal patterns and footfall has been maintained. These attributes, combined with the continued availability of debt on attractive terms, creates an opportunity to achieve healthy geared returns.” Read the full story here.

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