For UK retail shares, 2020 proved to be a nightmare as Covid-19 spread across the country. Bricks-and-mortar stores were particularly badly hit as the pandemic forced people to shop online. Non-essential retailers had to close their doors completely, of course. The extent of the damage was clear in the full-year financials that NewRiver REIT (LSE: NRR) released today.
Investor appetite is weak across all UK share indexes on Thursday. But confidence in retail and leisure property owner NewRiver has taken a particularly hard whack. Shares in the company were last trading 5% cheaper than last nightâs close, at 99.5p.
NewRiver REITâs losses widen
NewRiver REIT announced today that it had clocked up a pre-tax loss of ÂŁ153.2m during the 12 months to March 2021. This was up from its loss of ÂŁ121.6m in fiscal 2020.
Meanwhile the value of NewRiverâs property portfolio fell to ÂŁ974m last year from ÂŁ1.2bn a year earlier. This was due to asset sales as well as a 13.6% decline in the portfolioâs like-for-like valuation.
The company said, however, that the like-for-like valuation drop eased during the second half of the year. This reduced to 5.6% from 8.2% in the first six months of financial 2021.
A bright outlook
Chief executive Allan Lockhart said that âCovid-19 has posed unprecedented challengesâ, but he added that, âOur operational and financial achievements have reinforced our belief in the underlying strength of our portfolio and platformâ. As a consequence the business has decided to reinstate dividends and pay a 3p per share reward for last year.
Lockhart cheerily noted, âConsumer confidence in the UK economy has returned to pre-pandemic levels and we are well placed to benefit from consumers’ growing preference for shopping locally and supporting community assetsâ. He said too, âWe are starting to see early signs of an uplift in shopping centre liquidity and we expect the investment market to improve further as we emerge from the Covid-19 crisis.
âWith the benefit of an improving market backdrop and the insights gained from our recent strategic review we are looking forward to the coming year with genuine optimismâ, Lockhart added.
Should I buy this UK share?
City analysts are confident that NewRiver REIT will get back to moving in the right direction soon, too. Market consensus is for the firm to generate earnings per share of 12p per share in financial 2022. This compares with the losses of 49.1p per share the property giant recorded last year. Of course, forecasts can change based on future developments.Â
NewRiver trades on an low forward price-to-earnings (P/E) ratio of around 10 times. But despite its cheapness Iâm not tempted to add the UK property share to my portfolio. Itâs possible that profits could rebound strongly in the short-to-medium term as coronavirus restrictions are rolled back. But I still worry about NewRiverâs long-term future as e-commerce goes from strength to strength. And of course the emergence of Covid-19 variants could shred any near-term recovery to ribbons, too. Iâd rather buy other UK shares today.