South African retailers are re-sizing their stores into smaller spaces, Hyprop CEO, Morne Wilken said yesterday, although business confidence had improved under the government of national unity (GNU).
Hyprop’s net operating income for the year to June 2024 rose to R1.3 billion but headline earnings per share in the company dropped 24% to 299.4 cents per share compared to last year.
With distributable income per share also lower by 8.6% at 370.4 cents, Hyprop’s final dividend of 280 cents per share was 6.4% lower than the previous contrasting period.
Last month, Hyprop signed binding sale agreements for the disposal of its sub-Saharan Africa portfolio against the backdrop of intensified focus on its SA portfolio. During the year to June, Hyprop saw SA tenants’ turnover grow by 5.1% while retail vacancies remained at a lowly 1.8%.
Despite this, Hyprop said yesterday that anchor retail tenants in SA - including Game, Edgars and Pick n Pay, among others - were rightsizng their stores.
“Pick n Pay have indicated that they would like their supermarkets to be a certain size so we are looking to rightsize those,” Wilken said during a presentation of the company’s financials yesterday.
“For Edgars, since the business rescue they still have big stores so we want to rightsize the shops while Game has indicated they also want smaller stores and we are looking at that.”
However, Woolworths was seeking to expand its stores under Hyprop. Wilken said Hyprop “would like to expand” some stores for Woolworths and “make them bigger” over the coming months.
Although Pick n Pay was re-sizing its stores in line with a new strategy after its recent R4.5bn capital raise, Hyprop believed the retailer was now turning the corner for good even though it was closing some stores under its portfolio.
“Pick n Pay has done a lot of work to address their business. Their op performance of Pick n Pay has improved (and) we are assisting them to rightsize their stores. Pick n Pay has closed some shops; they have closed at Hyprop Corner and we are in talks with a supermarket chain to open there,” Wilken said.
Hyprop is positive that the prevailing economic environment bodes well for the private business sector to thrive, as opposed to the uncertainty that dogged SA prior to the May 29 elections. A government of national unity (GNU) is currently governing South Africa, with business executives largely optimistic of prospects under the dispensation.
For Wilken, “the changes after elections have been positive” as “business confidence has picked up and there are a lot of benefits” coming from that.
However, he added: “There are still things to be done and there are some changes of what they are going to do with the pension and all that; I don’t think it's such a good idea but obviously that will be beneficial for retail because people will have access to further funds.”
Hyprop closed the year to June 2024 with a liquidity position made up of R803 million in cash and R2bn in available bank facilities. It also saw a R600m reduction in euro borrowings in line with its debt amortisation/ reduction strategy while R500m in new capital had been raised.
Hyprop expects to increase its distributable income per share for the year to June next year by between 4% and 7%. Shares in the company traded 2.55% stronger in early trade on the JSE yesterday.
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