British shopping mall giant Intu says rescue talks with crditors have failed to secure its future and it will go into administration
Watford (United Kingdom) (AFP) - British shopping mall giant Intu, already struggling before the coronavirus lockdown in a tough retail climate, on Friday said it was going into administration after failing to secure a financial lifeline.
The debt-laden firm, which owns 17 giant shopping malls including MetroCentre, the Trafford Centre in northern England, and Lakeside in the southeast, had been seeking to progress talks with creditors before a (2300 GMT) deadline.
“Discussions have been ongoing… However, insufficient alignment and agreement… has been achieved with financial stakeholders,” it said in a statement.
“As such, application is being made for the administrators to be appointed to Intu and several other key central entities in the Intu Group.”
The company said it has applied for KPMG to be appointed administrators, adding that its shopping centres remain open but its shares have been suspended.
Shopping centres in Britain were forced to close for almost three months after the government imposed a nationwide lockdown on March 23 in a bid to halt the COVID-19 outbreak – further hurting Intu which has been in trouble for some time as people increasingly shop online.
Lockdown restrictions began to be eased this month but this was simply too late to save the group.
At the IntuWatford mall, in the commuter town of Watford northwest of London, there was a steady stream of shoppers at its shops and food outlets on Friday, although restaurants remained shuttered.
Social distancing remained in place while all staff wore masks and dispensed hand sanitiser to customers.
- ‘A shame if it shuts’ -
“It will be a shame if it is shut,” said shopper Kate, 53, from nearby Hemel Hempstead, holding her shopping bag from cut-price clothing store Primark.
“I’ve been coming here for years. It’s not just the shops – you have the cinema now and lots of places to eat.”
The centre, located not far from the football stadium of English Premier League football team Watford, is better placed than other Intu locations because the local authority owns a seven-percent stake and the freehold of the building.
The Watford Observer local newspaper reported this meant the shopping centre would remain open at least in the short term, until a buyer is found.
Administration is the process whereby a troubled company calls in independent financial help in a bid to restructure and remain operational until a solution is found.
At the Herbal Inn, a chain which specialises in traditional Chinese medicine, manager Amy said: “We reopened 10 days ago.
“Before the lockdown we had more customers but now we can’t do treatments, acupuncture and massage.
“Now we just do sales of products, which have been so-so,” she told AFP as shoppers milled around the store.
The Intu group employs 2,500 staff across all its malls but another 100,000 people work at shops and restaurants inside its facilities. Another 30,000 are involved on the supply side.
“This is a huge, significant event for the industry because Intu is the owner of some of the largest retail destinations… in the UK,” said analyst Richard Lim at Retail Economics.
“They have not responded quickly enough to the changing retail environment,” Lim told AFP, noting the rise of online retail “was a prior underlying trend before COVID-19”.
Intu had said Tuesday that some of its centres “have reduced rent collections as a result of COVID-19”, adding that some may be forced to shut for a period.
- Tesco ‘reaping benefits’ -
In stark contrast to Intu, British supermarket king Tesco revealed on Friday that first-quarter sales had spiked eight percent to £13.4 billion ($16.6 billion, 14.8 billion euros) – boosted by rocketing online purchases as people switched to grocery deliveries during the virus lockdown.
“There has been a structural shift from physical to online ordering of goods and services for some time, and any company that hasn’t recognise this change is now paying the price,” said Daniel Coatsworth, analyst at stockbroker AJ Bell.
“Tesco is reaping the benefits of significant investment into infrastructure to support the delivery of groceries ordered via its website and app. In contrast, Intu is paying the price for relying on traditional retail.”