(Bloomberg)—Europe’s biggest mall landlords are enjoying a recovery even as storm clouds gather on the horizon.
Unibail Rodamco Westfield and Hammerson Plc reported earnings that rebounded in the first half as the impact of the pandemic subsided more quickly than expected, according to separate statements Thursday. Unibail’s adjusted earnings per share jumped 53.1%, while Hammerson said its adjusted earnings rose 154% in the six months through June.
Europe’s retail landlords have struggled through a torrid period as lockdowns designed to limit the spread of coronavirus added to structural changes in consumer spending that has shifted online. For those that have survived, the recovery now looks set to be stymied by a cost of living crisis that’s hitting discretionary spending and rising interest rates that threaten to further undermine investor appetite for brick and mortar stores.
“We are a better, more resilient, and financially secure business as a result of the actions taken since the beginning of 2021,” Hammerson Chief Executive Officer Rita-Rose Gagne said in the statement. “We are conscious of the potentially volatile environment ahead and remain focused on delivering our strategy.”
Tenant sales for both landlords exceeded 2019 levels during the second quarter, according to both statements. That helped Unibail revise its guidance upwards for earnings.
Price hikes are appearing across the board. McDonald’s Corp. said Wednesday that it is lifting the cost of a basic cheeseburger above £1 ($1.22) for the first time ever in Britain, as it grapples with escalating energy and food costs. An Amazon Prime subscription is becoming 31% more expensive, on average, across five of the tech company’s European markets. Well-heeled shoppers are also having to swallow higher prices at Mercedes-Benz AG and luxury fashion brand LVMH.
While some of the UK’s most prominent consumer giants have surprised markets this week by revealing strong sales and profits -- even after they ramped up their prices -- it’s not clear how long consumers can continue to bear the brunt.
--With assistance from Nishant Kumar.
© 2022 Bloomberg L.P.
