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Consumption at 50% of last year’s levels: Phoenix Mills

Top investors and developers are looking to buy out shopping malls and land to expand their retail realty portfolios on the back of urban India’s consumption story.  Photo: Ramesh Pathania/MintPremium
Top investors and developers are looking to buy out shopping malls and land to expand their retail realty portfolios on the back of urban India’s consumption story. Photo: Ramesh Pathania/Mint

  • Since June, when malls were allowed to reopen in certain parts of the country and, more recently in Maharashtra, all Phoenix malls, barring one in Chennai, are now operational
  • The company has also seen an uptick in rental collections

MUMBAI : The Phoenix Mills Ltd has seen average daily consumption at its shopping malls recover to 50% of last year’s levels with “serious" shoppers returning and spending more per visit now than they did before the covid-19 outbreak, said a senior company executive.

Since June, when malls were allowed to reopen in certain parts of the country and, more recently in Maharashtra, all Phoenix malls, barring one in Chennai, are now operational.

“We have seen a fantastic rebound in consumption. The same-store sales for August is at 50% of last year, after taking out the non-permissible activities such as food and beverages. Consumption has grown 18-19% in August third week, over the second week," said Shishir Shrivastava, joint managing director, The Phoenix Mills, adding that he is optimistic about consumption growing at a strong pace over the next 4-5 months on festive season demand, and touching pre-covid-level sales by the end of this fiscal.

The company has also seen an uptick in rental collections. “In Q1 of FY21, rental collection from malls was at 40 crore, whereas, between 1 July and the third week of August has gone up to 60 crore," he said.

While overall spends are still half of last year, average spend per footfall has seen a sharp rise. In fact, average spends are now far in excess of pre-covid levels.

According to Shrivastava, the rise in average spends is not just a function of pent up demand. "We are seeing that a lot of serious shoppers are preferring the safer environment of the mall that we are providing, over high street locations where a lot of the factors are not under the control of store owners."

Average spend per footfall grew 76% month-on-month to 2,583 in July, which is also significantly higher than that of July 2019, when average spend was just 837, according to data from the company’s latest investor presentation.

Certain categories such as electronics have seen a sharp rebound, recovering to almost 80% of the sales seen in August last year, said Shrivastava, adding that sales in the accessories, watches and jewellery category is at 60% of last year’s levels.

“With offices starting to open we have started seeing good movement in fashion and footwear and as restaurants open up across cities this category will see more momentum," he added.

Last week the company raised 1,100 crore through a qualified institutional placement, which saw investment from the Government of Singapore, SBI Mutual Fund, HDFC Mutual Fund, HSBC, Baillie Gifford, as well as existing investors of the company such as Schroeder, TT International, Aditya Birla Sun Life Mutual Fund, Motilal Oswal and Invesco.

Shrivastava said with the QIP, the cash (and cash equivalents) position of the company stands comfortable at 1,921 crore. He added that the fundraise has helped the company build a war chest to look at acquisitions over the coming months.

“Given the current environment, we expect some malls to come on the market for sale in the next 4-5 months and these will be available at attractive valuations. We are looking at such opportunities in markets such as Gurgaon, Hyderabad, Bangalore, Chandigarh and Mumbai Metropolitan Region," said Shrivastava.

Apart from the recent fundraise, promoters of the company also sold a part of their stake, about 7.28%, earlier this week for around Rs833 crore.

Shrivastava said that the stake sale was undertaken by the promoters to meet investor demand seen in the QIP as well as to create more liquidity in the stock.

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