The company’s sales had previously dropped by 3.3% in the third quarter of FY26 and by 5.4% in the fourth, with year-to-date figures through September 2026 showing a 3.5% decrease. This shift reverses the growth observed in the same periods one year earlier, when department store sales increased by 5.2% in Q3 FY25, 1.7% in Q4, and 4.2% in Q1 FY26.
Department stores contribute only 3% of Vicinity’s total revenue, while specialty retailers, including mini-majors, account for 42%. Specialty sales rose by 1.2% in Q1 FY27, recovering from a 0.9% decline in the prior quarter. Discount department stores, including Kmart and Big W, experienced a 5.1% increase in Q3 FY26 but saw only a 0.3% gain in Q4, followed by a 2.8% rise in Q1 FY27.
Sales in apparel and footwear climbed by 3.5% in Q1 FY27, reversing a 0.2% drop in the previous quarter. Vicinity attributed the improvement to a reclassification of activewear retailers from leisure to apparel. Meanwhile, leisure sales fell by 2% in Q1 after a 2.4% gain in Q4. Jewelry sales emerged as a standout performer, jumping from 5% growth in Q4 FY26 to 9.4% in Q1 FY27.
Peter Huddle, Vicinity Centres’ CEO, linked the department store decline to broader economic pressures. Rising interest rates, now at a 15-year high, along with unemployment at 4.7%, its highest level in nearly five years, have weighed on consumer spending. Tighter global capital conditions are also prompting retailers to reassess risk in a higher-rate environment.
Despite these challenges, Huddle highlighted the resilience of Vicinity’s retail portfolio, which recorded 3% total sales growth in the September quarter, down from 4.4% a year earlier. Specialty and mini-major retailers drove 3.6% growth in the quarter, up from 2% and 3.2% in the previous two periods. Shoppers remain focused on value, quality, and convenience, though discretionary categories like jewelry and cosmetics have held steady.
In luxury retail, Huddle acknowledged near-term spending pressures from cost-of-living concerns but emphasized ongoing investments. Vicinity is advancing projects at Chadstone to expand space for global luxury brands, reflecting confidence in Australia’s long-term luxury market potential.
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