Mall Giant Simon Lost ‘Nearly 10,500 Shopping Days’ — Here’s What That Did to Its Q2

Simon Property Group Inc. posted lower-than-anticipated earnings and sales results as its retail properties were closed for “nearly 10,500 shopping days” in aggregate during the second quarter.

The Indianapolis-based mall operator announced today that it had logged profits of $254.2 million, or earnings of 83 cents per diluted share, compared with last year’s income of $495.3 million, or earnings of $1.60 per diluted share. Revenues for the three months ended June 30 came in at $1.06 billion, versus the prior year’s $1.4 billion.

Wall Street had anticipated earnings of 98 cents and revenues of $1.14 billion.

“We continue to navigate through the challenging times presented by the pandemic with a commitment to the safety of our employees, shoppers, retailers and the communities we serve,” chairman, president and CEO David Simon said in a statement. “Despite losing nearly 10,500 shopping days in our U.S. portfolio in the second quarter, we produced solid profitability and positive cash flow from operations.”

Following “extensive discussions” with federal, state and local officials, all of Simon’s properties shuttered in mid-March to help curb the spread of COVID-19. On the first of May, it began a gradual reopening of its shopping centers where permitted to do so, and all locations resumed business as of July 10. However, seven outlets in California closed once again on July 15 due to renewed government restrictions.

As of August 7, 91% of the tenants across Simon’s buildings were open and operating. The company said it has collected approximately 51% of its contractual rent billed for the months of April and May, about 69% for June and roughly 73% for July.

“We have generally been encouraged by the shopper response, particularly in certain locations, after reopening,” Simon added. “These trends reinforce that our portfolio is an attractive destination for consumers. We remain committed to supporting our thousands of local and regional small businesses and restaurant entrepreneurs by granting rent abatements for the period they were closed.”

The quarterly report came a day after a highly cited exclusive from The Wall Street Journal suggested that the mall giant and Amazon.com Inc. could take over the spaces left by struggling department store chains in the wake of their bankruptcies. According to the article, Simon and the online retail behemoth are in talks to turn some of JCPenney’s and Sears’ formerly occupied anchor stores into fulfillment centers.

Sources who spoke with the WSJ said that discussions between Amazon and Simon have been under way for months — beginning even before the coronavirus pandemic swept the United States. As of May, a public filing revealed that Simon’s malls have 63 JCPenney and 11 Sears units. It is unclear how many outposts will be impacted by such a deal.

Over the past few years, Simon has been snapping up retailers like Aéropostale and Forever 21, and most recently making a joint stalking-horse bid for the bankrupt Brooks Brothers, purportedly to avoid dark storefronts in its portfolio of malls. In June, reports emerged indicating that the mall giant along with brand management firm Authentic Brands Group and Brookfield Property Partners were interested in pulling JCPenney out of bankruptcy.

As of June 30, 2020, Simon had $8.5 billion in liquidity, including $3.6 billion of cash on hand and $4.9 billion available under its revolving credit facilities.

“Our company is well-positioned through a combination of deep brand relationships, the best portfolio with a strong mix of geographic locations and product types and a strong balance sheet, to continue our leadership position in the retail real estate industry,” explained Simon.