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After 10 years, Pandora has opted not to renew the lease on its flagship store in Sydney's Pitt Street Mall.
After 10 years, Pandora has opted not to renew the lease on its flagship store in Sydney's Pitt Street Mall.

Pandora to close Sydney flagship store as lease negotiations fail

After failing to reach an agreement with landlord Scentre Group, Pandora Jewelry will close its Westfield Sydney flagship store, located in the prestigious Pitt Street Mall retail precinct.

The company opted not to renew its lease on the premises – due to expire at the end of September – following lengthy discussions with Scentre, which is Australia’s largest retail landlord and the operator of Westfield shopping centres.

Pandora has occupied the site since 2010.

David Allen, returning to Pandora Australia as General Manager of the APAC cluster
David Allen, returning to Pandora Australia as General Manager of the APAC cluster
"It was a tough call and certainly not one that was arrived at lightly, but without due consideration from Scentre Group, the trading conditions at Pitt Street Mall are untenable and unjustifiable"
David Allen, Pandora Jewelry

David Allen, general manager of the Pandora Pacific division, said, “Over the past six-to-eight weeks we have had extensive discussion with Scentre Group in an attempt to come to a mutual agreement in the lease renegotiation process.

"Unfortunately these discussions did not lead to a satisfactory outcome for the business and as such we have made the decision to end the tenancy at term and close.”

He added, “It was a tough call and certainly not one that was arrived at lightly, but without due consideration from Scentre Group, the trading conditions at Pitt Street Mall are untenable and unjustifiable for the wider organisation.”

A 2019 report by commercial real estate services firm Cushman & Wakefield found that Pitt Street Mall ranked among the top 10 most expensive shopping strips internationally, alongside New York City’s Fifth Avenue, New Bond Street in London, Tokyo’s Ginza, and the Champs-Élysées in Paris.

It was the second most-expensive in the Asia-Pacific region, behind only Causeway Bay in Hong Kong, and recorded the largest yearly increase in rent of any location in the top 10.

» Background reading: The demise of fashion jewellery chain stores

However, the COVID-19 pandemic resulted in a dramatic decrease in footfall. An analysis by Roy Morgan and UberMedia found that the number of mobile devices in the Sydney CBD on Sunday 16 August – the most recent available date – was 12,971, compared with 24,147 recorded on Sunday 5 January.

When approached for comment on the Pandora negotiation, a spokesperson for Scentre Group told Jeweller, “We don’t comment on individual commercial arrangements with our retail partners.”

The Group – which recorded a $3.6 billion loss in the first half of the year, including a $4 billion reduction in the value of its property portfolio – recently made headlines for its rent dispute with long-term tenant Mosaic Group, which resulted in the temporary closure of 129 stores.

The dispute was later resolved under confidential terms and the stores were permitted to reopen.

Scentre Group collected 86 per cent of its monthly rental billings for August, totalling $183 million.

A pattern of closures

Pandora is not alone in permanently closing stores due to failed landlord negotiations during the COVID-19 crisis.

Michael Hill International has rationalised its store network in Australia, while fashion jewellery chain Lovisa entirely withdrew from the Spanish market, closing nine stores due to landlord intransigence.

The decision to close the Pitt Street Mall store leaves Pandora with three Sydney CBD locations. Two are company owned-and-operated, and one is franchised to “an owner with whom we enjoy a great partnership,” Allen said.

 

More reading:
Seeing eye to eye: Retail rent review
David Allen returns to lead Pandora Australia; Phil McNutt steps down
2020 State of the Industry Report











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