Isetan will not renew lease of 'loss-making' Westgate store
It says that outlet is losing money
Isetan Singapore will not renew the lease for its Westgate store in Jurong East, noting the outlet is "loss-making".
In a regulatory filing on the Singapore Exchange yesterday, the Japanese department store operator said it decided not to renew the lease after failing to come to an agreement with JG Trustee on renewal terms.
Isetan's latest move comes amid stiff competition on the retail scene and falling sales at its flagship store at Shaw Centre off Orchard Road.
Its Jurong East store, which opened in 2013 as one of Westgate's anchor tenants, has both a department store and a supermarket - its first outside the Orchard Road area.
While Westgate declined to disclose the space Isetan occupies, news reports in 2012 said it would take up some 60,000 sq ft of the mall's basement two.
Isetan's lease at Westgate will expire on Dec 22 this year.
Westgate's centre manager Sabrina Lai told The Straits Times: "We are in advanced negotiations with several prospects and exploring several options for the use of the space."
Brands that have closed their Westgate stores include clothing retailer Cos, the higher-end sister brand to H&M.
Isetan's retail segment saw a net loss of $21.2 million last year, up from a net loss of $9.4 million in 2017. Its losses in 2018 include a $11.9 million impairment for two under-performing heartland stores, as well as a $2.4 million provision for onerous rental contracts.
It had said in a filing on April 10 that it will put in about $12 million to convert its flagship Isetan Scotts into a lifestyle destination store, with a major renovation set for completion next year.
The store will be reconfigured to emphasise on areas like beauty and athleisure, said Isetan in a separate statement.
Its sub-leasing area will also be expanded for stable recurring income. It added that since it revamped its other store in Tampines in 2017, "the improvement in sales and earnings of the renovated portion has been significant".
Isetan is also looking at a greater use of digital platforms, with a new mobile app this year with features such as electronic rebates.
As the retail landscape here suffers, department stores such as Tangs and Robinsons have made changes to their store offerings and layouts in the last five to six years, said Singapore Polytechnic marketing and retail lecturer Lucas Tok.
These include making store layouts less structured, creating multiple pathways for customers to explore the available brands.