The disappearance of Dick Smith highlighted the trends and challenges facing Scentre Group's Westfield shopping centres.
Scentre, which operates Westfield-branded centres in Australia, managed to swiftly re-lease all 40 of its stores freed up by the collapse of the failed electronics retailer, which closed the last of its outlets in May.
But the gap between tenancies had an effect on cashflow and the new occupants were very different to the old ones.
"Of those 40 stores, we didn't replace one with a technology use," chief executive Peter Allen said on Tuesday as Scentre posted a lift in first-half profit.
"It was general merchandise, it was apparel - both menswear and womenswear."
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Mr Allen said that Scentre's tenants were also making different demands when it came to new premises.
"What were seeing across the whole of our portfolio is that those better retailers are wanting to have fewer stores but a larger footprint and a larger store," Mr Allen said.
"Our ability to provide that is difficult given the existing lease arrangements which we have in place."
Nonetheless, the demand from retailers is there, as evidenced by Westfield's recent acquisition of David Jones' historic Sydney store to allow expansion of Westfield Sydney.
Funds from operation, the company's preferred measure of performance, rose 2.1 per cent to $617 million or 11.61 cents per security, and Scentre says it is on track to achieve its full-year forecast of approximately three per cent growth.
"We've got lower interest rates, we've got unemployment being reduced, we've still got positive income growth and the outlook for the business and by the retailers is pretty positive," Mr Allen said.
"Housing prices - the creation of wealth - is still there for Australian families. Whilst there's some dark clouds on the horizon for the overall global economy, Australia is sitting pretty good in that regard."
Total revenue for the six months to June 30 declined 5.2 per cent to $1.276 billion, but first-half net profit improved 6.6 per cent to $1.154 billion as Scentre cut its expenses by $31.1 million.
At 1120 AEST, Scentre shares were up one cent, or 0.2 per cent, to $5.08.
SCENTRE SITTING PRETTY
* Net profit up 6.6pct to $1.154b
* Funds from operation up 2.1pct to $616.7m
* Interim distribution up 0.20 cents to 10.65 cents
