More Musical Chairs in Australia’s Retail Industry

More changes are taking place in Australia's embattled retail industry as Centro Retail Australia sold half of its stakes in three premium shopping centres, while Retravision Southern is teetering towards administration.

Centro Retail sold 50 per cent of its shares in Centro Galleria in Perth, Centro Colonnades in Adelaide and Centro The Glen in Melbourne for $690.4 million.

The firm placed the half-shares on the market in April. After removing the transaction costs, Centro Retail is expected to earn 685 million from the sale, which Centro Chief Executive Steven Sewell said was redefining event for the retailer.

He said Centro will use the proceeds of the sale to reduce to 26 per cent and restructure its $2-billion core lending facility so it could move ahead with its various redevelopment projects. In 2011, Centro underwent a $7-billion restructuring, including a $2.9-billion debt for equity swap.

The shares were sold to billionaire Stan Perron whose company has several large shopping centres on its property portfolio. The Perron Group won the Centro shares from other local and offshore investors such as the Queensland Investment Corporation, American pension fund TIAA-CREF and GPT, an ASX-listed company.

Meanwhile, the financial woes of Retravision Southern is because of its cash flow problems which made it difficult for the retailer to pay supplies. The firm is an independently-owned franchise of Retravision and services stores in Victoria and Tasmania.

In 2011, Retravision Southern registered an 8.1 per cent drop in its profit to $357,000 on sales of $340 million.

In a meeting with store employees, Retravision South assured the workers they would be paid if the company goes into administration.

The financial problems of Retravision Southern reflects the general decline of the Australian retail industry and the impact on electronics retailers. In the middle of 2011, Harvey Norman shuttered or rebranded 23 Clive Peeters stores due to poor sales, while in March 2012, WOW closed 15 outlets. In the nine months to March, Harvey Norman logged a 25 per cent drop in profit.

However, Retravision Northern and Western, which operate independently from Southern, are not affected by the latter's problems and continue to trade strongly.