Solomon Lew, the chairman of retail group Premier Investments, says some landlords are still in denial about a ''broken'' model for rents in the retail sector, which he warns will not return when the COVID-19 pandemic is over.
Premier, which operates retail brands including Just Jeans, Smiggle, Jay Jays, Portmans and Dotti, suffered a 74 per cent slide in sales in the six weeks to May 6 after a shutdown of retail outlets, even though online sales jumped by 99 per cent over the same period.
The company announced on Tuesday that it would reopen most stores in Australia from Friday. It resumed trading in Queensland and the Northern Territory last Thursday after government restrictions in those precincts were loosened. Some stores at airports and in CBD locations will remain closed.
Premier shares had slumped to $8.95 on March 23 when the sharemarket hit its low point in this down cycle but the stock has since recovered to $15.42. Other retailers including Myer and Kathmandu, and travel firms Webjet and Flight Centre, partially rebounded on Friday and Monday as store reopenings boosted confidence, only to give up some of those gains on Tuesday.
But during its reopening and recovery phase, Premier intends only paying rent in arrears for all stores, at a gross percentage of sales.
Premier Investments has paid no rent to landlords during the shutdown period. It operates more than 900 outlets in Australia across seven brands.
"At the end of the day, the old model of fixed rent payable in advance is not going to work,'' Mr Lew said.
"The smart landlords are already knocking on the door, saying 'let's do a deal'. The others are in denial."
He said the federal government had put in place a strong set of policies which would help Australia recover, and the stringent approach to health and safety had put the nation in a solid position to now concentrate on rebuilding the economy.
"To a certain extent the Australian government has underwritten part of the recovery,'' he said. "Obviously we've done a lot better than other countries, we're very fortunate."
Premier had experienced some solid trading in Queensland since reopening stores last week and hopes for similar momentum nationwide.
"We're looking forward to the spoke in the wheel being put back in place, because that's what keeps the wheel turning,'' Mr Lew said.
Premier Retail chief executive Mark McInnes said there was a lot of uncertainty ahead and much would depend on whether the virus would stay controlled.
"The recovery is very uncertain by brand and by state,'' he said. "We really need the schools to go back to get Smiggle re-ignited."
Mr McInnes said shoppers in Queensland had embraced the reopening of stores in a sensible way, and going shopping was part of a semblance of a return to normal lives.
"What I see is people wanting to get out of the house. They were tired of being in isolation."
Mr McInnes said the rapid shift to online during the pandemic had pulled forward changes which might have been more gradual over the next decade.
The company also said stock levels and product assortments in stores would be inconsistent in some segments until December because there had been so much disruption.
Mr Lew said the group had already passed through JobKeeper payments to all eligible employees for the month of April and would continue to do so for the duration of the scheme. The group had stood down 9000 employees when it embarked on comprehensive store shutdowns.
Premier will reopen its New Zealand stores from Thursday, in line with the announcements from New Zealand Prime Minister Jacinda Ardern on Monday, which included retail stores being allowed to reopen as part of a loosening of broader restrictions.
The group's Smiggle operations in the United Kingdom will remain shut until at least June 1, and in the Republic of Ireland until at least June 29.
Premier said the overall shutdown of retail had meant that global sales were down 74 per cent for the six weeks to May 6, compared with the same period a year earlier. Global retail store network sales slumped by 99 per cent.
But online sales had jumped by 99 per cent.
Premier said its flagship online brand, sleepwear company Peter Alexander, had consistently broken weekly records, with online sales up 295 per cent during the time of the store closures.
During the week ended May 2, Peter Alexander's Australian online sales were up 18 per cent on last year’s total sales across both online and the entire 122 store and concession network in Australia.
Strict hygiene measures will be put in place at all Premier stores as they reopen, with social distancing rules applied, hand sanitiser for customers and staff, and frequent cleaning and disinfecting of communal areas.
Also on Tuesday, online retailer Kogan.com said it had added an extra 139,000 customers in April to its active customer base which was now at 1.95 million, and that sales had risen by 100 per cent during the month.
Founder and executive director Ruslan Kogan said structural changes in retail had been speeding up during the pandemic. "I think what's happening is that we've accelerated the shift to online by three or years in the last two months,'' Mr Kogan said.