THE owner of Southampton’s Westquay shopping centre has reported growing losses amid “challenging” conditions.

Hammerson made a loss of £319.8million in the first half of this year, compared with a £55.7m profit for the same period in 2018.

It said the crop of retailers drawing up company voluntary agreements (CVA) – together with companies going into administration – was the biggest single factor behind a drop in income.

Hammerson’s portfolio includes 11 “flagship” destinations including Westquay as well as Birmingham’s Bullring, London’s Brent Cross and Bristol’s Cabot Circus.

Ten of its retailers either cut their rent bills through CVAs or went into administration. These restructurings accounted for £1.3m of a £5.5m annualised reduction in rental income.

The landlord said of its UK operations: “With the global backdrop softening and continued Brexit uncertainty, GDP (gross domestic product) growth is expected to weaken to 1.3 per cent in 2019 and 1.6 per cent in 2020.

“However, a pick-up in wage growth and easing of inflationary pressures have seen household spending rise over the last six months and spending is expected to grow by 1.8 per cent in 2019 and 1.7 per cent in 2020.

“The projections assume that the UK signs a withdrawal agreement with the EU. Consumer confidence remains subdued as parliament struggles to decide on the country’s future relationship with the EU. Non-food retail continues to face price deflation alongside the impact of sterling weakness and increasing operating costs.”

It added: “Market conditions in UK retail continue to be challenging and net rental income, on a like-for-like basis, decreased by 6.8 per cent in the first six months of the year. Tenant restructuring, in the form of CVAs and administrations, has been the largest single factor reducing income.”

Footfall at Hammerson centres was up 0.5 per cent after several periods of decline, compared with an industry benchmark of a 3.2 per cent fall.

Retail sales were down two per cent at continuing centres. Strong sales in food and drink, sports and leisure and jewellery were offset by weak demand for high street fashion, it said.

Hammerson said the key themes of its company strategy included reducing debt and “optimising” its portfolio by selling assets and getting out of retail parks.

It said it was seeking to reduce the amount of floor space given over to “challenged retail categories” including department stores and high street fashion.

It wanted to replace them with “aspirational” fashion, leisure and food and drink brands.

Earlier this week, it was revealed that upmarket fashion and home brand the White Company was to open at Westquay.

Hammersons also drew attention to the announcement that Lego stores were due to open at Westquay and the Bullring this year.

Westquay was among several centres to hold a Festival of Light and had also hosted a maze in May, which drew more than 18,000 people over a 10-day period.

As revealed in the Daily Echo yesterday, Hammerson’s mid-year figures revealed that it was trying artificial intelligence technology at Westquay, using video cameras to monitor customer movements.