Scentre Group's share price is up almost 6% today

Scentre Group (ASX: SCG) has not received a lot of love in FY20 with the share price down 41.96% in …

| More on:
People shopping in shopping centre

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Scentre Group (ASX: SCG) has not received a lot of love in FY20 with the share price down 41.96% in the past 12 months. However, the share price has surged 5.99% today at the time of writing.

Retail stores are re-opening and customer visitations improving. Does it have a positive outlook?

Retail stores reopening and customer visitations improving

In a news publication released on its website yesterday, the group announced customer visitations have increased as stores re-open, illustrated by the table below:

 

May 2020 customer update

June 2020 customer update

% of retail stores open Australia

80%

92%

% of retail stores open NZ

93%

94%

% customer visitations for week ending 24 May 2020 (of the previous year)

80%

86%

As can be seen above, retail stores are re-opening and customers are coming back to shopping centres. In Australia, 92% of retail stores are open in June 2020 compared to 80% in the May update. Additionally, in New Zealand, there has been an increase of 1% in retail stores open. Across the group, customer visitations are up 6% in June compared to May.

Scentre Group director of customer experience, Phil McAveety said, "the immediate uplift in customer visitation reflects our desire as social beings to engage with friends and family and experience products and services in person."

There is a shift in spending in line with the easing of restrictions and there is the expectation of a recovery in the businesses most impacted. An online and physical presence is complimentary to businesses.

Outlook

Retail sales increased 16.3% in May 2020 representing a significant rebound in the industry compared to April as restrictions have been eased across Australia. While it may be too early to be optimistic as the gains experienced in May is a rebound from the 17.7% fall in April, the positive customer visitations and the number of retail stores opening is heading in the right direction.

However, consumer confidence has declined according to ANZ-Roy Morgan. There is a risk this could impact the foot traffic in shopping centres over the coming months.

ANZ Senior Economist, Catherine Birch, commented:

"The surge in COVID-19 cases in Victoria has dented consumer confidence, which dropped 4.6% last week. This was the largest fall since late-March, when national new daily cases peaked…Unfortunately, new daily cases in Victoria jumped to 75 on Monday, the state's fourth-highest daily total since the pandemic began. This a worrying sign for confidence and a setback for the recovery."

Foolish takeaway

Scentre Group has shopping centres all around the country. The geographic diversification could help it withstand the second wave that is being experienced in Victoria right now. However, the fall in consumer confidence could impact the increase in customers returning to the group's shopping centres.

Personally, I would like to see more of a prolonged recovery in the retail industry before adding to my position in Scentre Group. 

Motley Fool contributor Matthew Donald owns shares of Scentre Group. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Oil industry worker climbing up metal construction and smiling.
Energy Shares

ASX 200 energy shares lead the market as US trade deals fuel optimism

ASX energy shares lifted 3.94% as more US trade deals led to improved market sentiment.

Read more »

A female ASX investor looks through a magnifying glass that enlarges her eye and holds her hand to her face with her mouth open as if looking at something of great interest or surprise.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Broker Notes

These ASX 200 shares could rise 50% to 60%

Brokers believe these shares could deliver big returns for investors.

Read more »

A girl is handed an oversized ice cream cone with lots of different flavours.
Best Shares

8 ASX All Ords shares that tripled in value in FY25

Just 8 out of the 500 companies making up the ASX All Ords achieved share price growth of 200% or…

Read more »

Broker written in white with a man drawing a yellow underline.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Woman with a scared look has hands on her face.
Broker Notes

Bapcor shares fell more than 30% yesterday. Should investors buy in the dip?

Is this a value opportunity?

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Broker Notes

Broker raises price targets on 2 ASX 200 shares to buy

Ord Minnett has just upped its 12-month share price targets on 2 buy-rated ASX 200 stocks.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 34% on strong earnings growth

Investors just sent this ASX All Ords stock surging 34%. Here’s what’s happening.

Read more »