API warns landlords to cut rents
SHOPPING centre landlords are being urged to come to the table and renegotiate pharmacy rents amid a decline in foot traffic, as a result of the COVID-19 crisis.
Presenting Australian Pharmaceutical Industries’ (API) half year results yesterday, CEO, Richard Vincent, warned the group was willing to shut stores if the group could not secure more reasonable rental terms, the Sydney Morning Herald reported.
“We have engaged in discussions with our landlords and in most instances those discussions are proving fruitful, but where they are not fruitful, we are not afraid to permanently close stores or clinics,” he said.
“Our conversations have been unfolding very slowly. In a lot of cases, they [landlords] have said ‘we’ll get to you, or a particular store, in due course’.”
Vincent’s comments came as the company reported an 11.5% decrease in earnings before interest and tax on the prior corresponding period (PD yesterday), while the Priceline Pharmacy network recorded a 1.3% decline in like-forlike sales, excluding dispensary, for the same timeframe.
API’s warning follows reports that some CBD-based and shopping centre pharmacies have been forced to reduce opening hours, as a result of a significant fall in customer numbers stemming from the restrictions that have been implemented to tackle COVID-19 in Australia.
Speaking to Pharmacy Daily earlier this week, business consultant, Bruce Annabel, suggested that some pharmacy owners based in major shopping centres may need to review their store’s footprint to optimise their potential earnings.
“The situation today is a lot of these pharmacies are too big and carry a lot of stock they can’t sell, particularly now,” he said.
“Some of my clients have been staying in shopping centre, but they’ve been really cutting back on space and doing deals with landlords and getting doctors in nearby or adjacent, and cutting their space way back to 200-250m2.
“If you do that you get good sales per 1m2 and you’ll be selling higher margin lines where you can compete.”