A retail company has warned that more than 350 of its stores could close if landlords don’t negotiate rental prices after COVID-19.
Premier Investments Limited, which has brands including Just Jeans and Jay Jays, revealed on Friday a profit of $137.8million in the last financial year, which is a 29 per cent increase on the year before.
But despite the profit the company says 350 out of its 1040 stores might have to close in Australia and New Zealand.
Premier Investments Limited warns that more than 350 Just Jeans, Peter Alexander and Jay Jays stores could close after COVID-19 downturn if landlords aren’t willing to negotiate rent (pictured, one of their brands Just Jeans)
This is due to the changing nature of shopping due to restrictions such as social distancing and store capacity limits (pictured, quiet shopping centre in Melbourne on September 12)
This is due to the changing nature of shopping due to restrictions such as social distancing and store capacity limits.
Rental agreements also play a major part in the possibility of store closures.
‘While it is not Premier Retail’s objective to close any stores, should landlords not accept the major shift in consumer shopping behaviour and adjust their rents according to consumer shopping preferences, store closures will be inevitable, the ASX report read.
During April 2020 the company paid no rent due to COVID-19 shutdowns, and paid $59.2million for the rest of the year.
Many rental agreements are in the midst of re-negotiations.
Over the last seven years Premier Investments Limited has closed 137 stores.
The company said this demonstrates ‘its willingness to walk away from stores with unrealistic rents that deliver unprofitable sales’.
Rental agreements also play a major part in the possibility of store closures (pictured, one of their brands Jay Jays)
Over the last seven years Premier Investments Limited has closed 137 stores (pictured, one of their brands Peter Alexander)
CEO Mark McInnes said that in the first half of the year record sales were a contributor to the rise in profits while in the second-half, which was impacted by COVID-19, it was a flexible and dedicated sales team.
‘Premier Retail’s highly profitable online capability and the flexibility of our property portfolio, combined with the decisions we have taken in response to COVID-19, leave the Group best placed to maximise our position in the accelerating retail industry restructure,’ Mr Innes said.
The company stood down 9,000 employees on March 26 due to COVID-19 shut downs, with staff eligible for JobKeeper subsidies.