Mosaic in big jump after deal on leases

PEACE has broken out between Westfield shopping centres and Mosaic Brands after a rent dispute led to the women’s fashion chain being locked out of more than 100 of its stores.

The deal reached between Scentre Group, which owns Westfield shopping centres in Australia, and Mosaic, could herald a number of agreements between other landlords and retailers after disputes over rent amid the coronavirus pandemic.

Mosaic, whose brands include Noni B, Katie’s, Millers and Rivers, on Monday said it had reached an agreement with Scentre “that worked for both parties”.

All impacted stores have reopened expect for those in Victoria, which remains under strict lockdown.

The deal put a rocket under Mosaic’s share price, which surged 17.7 per cent on Monday to close at 56c.

The gains follow it plunging by more than 30 per cent on August 20 when it announced Scentre had locked it out of 129 of its stores located in Westfield properties.

The move marked a dramatic escalation in tensions between shopping centre owners and retailers as they stand off over how much rent should be paid during the pandemic, as well as the shape of future tenancy agreements.

“We’re pleased to have reopened our Westfield stores over the weekend following a mutually agreeable outcome to our negotiations with Scentre Group,” Mosaic chairman Richard Facioni said.

“Our Victorian stores remain temporarily closed for health and safety reasons. We look forward to reopening those stores as soon as it is safe for our team and customers to do so.

“This is a good outcome for Mosaic and, in particular, the 400 affected team members. As we noted last week, shuttered stores work for no one.”

However, Mr Facioni repeated his warning that the retail chain could close up to 500 stores over the coming two years if it was unable to secure cheaper rents.

“The group will continue to negotiate with landlords nationally to achieve commercially sound lease terms consistent with the fundamental shift the group sees in the retail rent market,” he said.

“Whilst the group will seek to minimise future store closures, it continues to anticipate the potential closure of 300 to 500 stores over the coming 12 to 24 months.”

Mosaic said the terms of the deal were confidential.

Premier Investments, backed by Melbourne retail billionaire Solomon Lew, has led the retail revolt against shopping centres by refusing to pay rent during lockdowns.

Premier is also pushing for a new model where rent would be a percentage of sales — an approach rejected by both Scentre and its rival Vicinity Centres.