Westfield Group, the world’s biggest shopping center owner by market value, reported the biggest increase in U.S. sales in almost three years and said it will start A$1 billion ($927 million) of developments.
U.S. sales rose 5.3 percent in the three months ended March 31 from a year ago, the Sydney-based company said in a statement, the biggest increase since the June quarter of 2007.
“Westfield’s results are relatively impressive for a group which has been heavily exposed to significant slowdown in consumer spending,” said Jamie Spiteri, head dealer at Shaw Stockbroking Ltd. in Sydney. “It highlights their belief in and commitment to the anticipated recovery in U.S. spending.”
American consumers helped U.S. gross domestic product grow at a 3.2 percent annual rate in the first quarter as household spending climbed at the fastest pace in three years. Sales at retailers such as Macy’s Inc. and Starbucks Corp. accelerated.
“It’s extremely pleasing to note the resilience of the retailers during such a challenging period,” Steven Lowy, co- managing director of Westfield, said in a teleconference today. “Retailers are now emerging with stronger balance sheets and top line growth.”
Westfield is starting to see an increased appetite for new store openings in the U.S., Lowy said. The company earns more than a third of its revenue from shopping malls in the world’s largest economy.
Westfield shares added 0.1 percent to A$13.14 in Sydney.
Rising employment and wages spurred a 3.6 percent rise in consumer spending, the biggest increase since the first quarter of 2007, according to Commerce Department data.
Revenue from Australian operations rose 2 percent from the previous quarter. Australian consumer confidence, which held close to its highest level in almost three years in April, and an unemployment rate that’s almost half the levels in the U.S. and Europe, suggest households are weathering the central bank’s world-leading interest rate increases.
Westfield will add about A$800 million of developments in Australia and A$200 million in the U.S. in 2010, it said.
“We’ve estimated that they need to do about A$1.8 billion of development per annum as a normalized cap-ex program to justify the premium that the market applies to them,” said Simon Wheatley, analyst at Goldman Sachs JBWere Ltd. “So a A$1 billion is part-way there.”
The company will also undertake pre-development activity of about A$10 billion, and will seek to start as much as A$1 billion of projects a year after 2010, it said in the statement.
To contact the reporter on this story: Nichola Saminather in Sydney at email@example.com