The Vicinity Centres Re Ltd (ASX: VCX) is flip-flopping around gains and losses after the shopping centres owner released a messy profit result and reaffirmed its full year guidance.
The VCX share price slipped 0.2% to $2.56 at the time of writing after gaining 0.8% earlier when the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index is trading flat.
The owner of the Chadstone Shopping Centre reported a 2% increase in adjusted funds from operations (FFO) for the six months ended December 2018 with specialty store moving annual average (MAT) jumping 6% to since June 2018.
Can VCX outperform?
That's not too bad a result given the headwinds buffeting the retail sector and the news aligns with recent data that point to strength in smaller specialty retailers over their larger counterparts.
However, asset sales have made it a little harder to compare the current results and the group has lowered its interim dividend to 7.95 cents per security versus 8.1 cents per security it paid this time last year.
Management blamed the divestment of higher yielding but non-core assets over the past 18 months on the lower distribution.
Vicinity has an attractive portfolio of retail assets and its business shows signs of resilience in this economic climate, but I suspect these won't be enough to win new supporters.
Multiple headwinds
Vicinity is overly exposed to the luxury retailing – a strategy that has played well to "crazy rich Asians" (if you've been to Chadstone, you'll know what I mean) and the "wealth effect" from rising property prices.
But these two factors are waning fast. The slump in the property market, which isn't expected to show a recovery till 2020 if not later, is likely to force consumers to cut discretionary spending.
The trade war and weakening global economic growth could also prompt free-spending Asians to hold back.
Foolish takeaway
Those looking for growth in the retail space would be better off focusing on listed speciality retailers that can deliver growth, such as Premier Investments Limited (ASX: PMV) and JB Hi-Fi Limited (ASX: JBH). Even Breville Group Ltd (ASX: BRG) looks interesting after its stunning profit announcement yesterday (click here to find out more).
Those looking for dividends should also look outside the retail and residential property sectors as companies exposed to these industries could struggle to sustain their historically generous payout.
There are safer dividend payers on the ASX. The experts at the Motley Fool have picked three of their favourite income stocks for 2019.
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