Simon’s Profits Dip, But Business ‘Significantly’ Improving From COVID-19 Impact
Mall giant Simon Property Group’s profits dipped in the first quarter of this year, but the “business has significantly improved” since the coronavirus pandemic hit, with the company increasing its earnings projection, Chairman and CEO David Simon said during its Monday earnings call.
Simon posted $934 million in funds from operations in the first quarter of 2021, a drop from the $981 million during the same time last year, according to the company. The company’s revenue also dropped from $1.35 billion in the first quarter of 2020 to $1.24 billion at the start of this year.
However, Simon said the company has started to improve since the coronavirus hit, which decimated the retail industry and temporarily closed its malls for months.
“We’re pleased with the results,” Simon said. “We’re encouraged with what we’re seeing.”
Simon has started to see an increase in traffic to its properties across the country and its sales volumes have improved. The company also collected 95 percent of rents from its tenants in the first quarter, returning to pre-pandemic levels, Simon said.
The company also touted the bets it made on picking up bankrupt retailers through its Sparc Group, including JCPenney, Brooks Brothers and recently Eddie Bauer. Simon said the Sparc brands “outperformed” their sales and growth in April and May, with Forever 21 and Aéropostale beating their plans by more than $135 million total.
As a result, Simon increased its earning projection for this year. It originally expected its fund from operations to be at $9.50 to $9.75 per share, but it upped that to $9.70 to $9.80 per share, according to Simon.
Simon’s coming off of a year that’s been brutal for retailers, with dozens of brands filing for bankruptcy and malls forced to shutter for months. The owner lost $1 billion in revenue last year and, also three months ago, lost an Atlanta mall after it defaulted on a loan.