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15-01-2020, 06:21 PM
Chow Tai Fook to shut protest-hit stores in a sign Hong Kong’s retail slump to persist in 2020
* Jewellery retailer plans to close about a fifth of stores in Hong Kong’s protest-hit tourist districts to focus on growing the mainland China market
* Move signals big retailers are another ‘damning verdict’ on retail sales outlook amid political uncertainty
Pearl Liu
Published: 2:03pm, 15 Jan, 2020
Updated: 2:24pm, 15 Jan, 2020
Chow Tai Fook Jewellery Group’s decision to shut about one-fifth of its stores in protest-hit Hong Kong and focus on growing its presence in the mainland China market suggests a slump in retail sales is not about the reverse soon.
The world’s second-largest jewellery chain by market value has leases on more than 40 of its stores in Hong Kong expiring between April 2020 and March 2021, a spokesperson said in an email late Tuesday. The plan is not to renew as many as 15 of them in tourist districts such as Causeway Bay, Mong Kok and Tsim Sha Tsui, citing “macro headwinds” as a reason.
The decision underscores the grim outlook for Hong Kong’s retail industry, even as seven months of anti-government protests have subsided in recent weeks. Retail sales slumped 23.6 per cent November, following a record 24.4 per cent fall in October, while the economy slipped into a technical recession in the third quarter.
Hardest-hit goods were luxury items such as jewellery and watches, with a staggering 43.5 per cent drop, according to government data.
“The decision is 100 per cent related to the anti-government protests that have discouraged mainland tourists from coming to shop in Hong Kong,” said Louis Tse Ming-kwong, managing director of VC Asset Management. “This is another damning verdict on Hong Kong’s retail business outlook. Hong Kong retailers going northbound in their expansion will become a trend.”
Other retailers may follow to reduce the number of their shops in Hong Kong and reallocate their resources to mainland cities, which could offer cheaper rents and staff costs, Tse said. China’s leadership is also pushing for higher domestic consumption amid the rising purchasing power of the middle class, he added.
Since luxury brand Prada decided last year not to renew its lease in Hong Kong, businesses including BestMart360 and Louis Vuitton have also pulled back from the scene as social unrest dented traffic and the city’s landlords have declined to offer bigger rent reductions to alleviate the crisis.
Hong Kong went through its worst political crisis during the second half of last year, triggered by the unpopular and now-withdrawn extradition bill. As protests escalated, violent clashes with police ensued, leaving the city’s major shopping malls deserted and occasionally smashed.
The local economy is expected to contract 1.9 per cent in 2019, according to the International Monetary Fund, before eking out a small growth this year. The government has since rolled out several rounds of stimulus packages targeted at selected industries to soften the blow.
Century-old French retailer Louis Vuitton have decided to close its flagship store at Times Square when its lease expires in June this year, according to people involved in the matter. Prada, which operates a flagship store on the world’s most expensive shopping street in the world, turned down its landlord’s rent offer and will move out this June, people have said.
Best Mart360, which has had 75 of its 102 shops trashed or firebombed by hard core protesters last year, will expand its business in mainland China to reduce its reliance on the Hong Kong market, according to its founder and chairman Lin Tsz-fung. Fast Retailing Co of Japan saw its overseas sales decline by the most in a decade, partly due to protests in Hong Kong.
Tiffany & Co, the biggest jeweller, revealed last month that its sales in mainland China posted a double-digit growth in the three months to October 31, while its Hong Kong side saw “significant disruptions.” Burberry said sales in Hong Kong had fallen 22 per cent in the six months to September, while its sales in the mainland had accelerated from the “mid to high teens” in the second quarter in mainland.
The company expects to see a net addition of 600 stores in mainland China, according to its expansion plan, on top of an existing 3,636 there.
Chow Tai Fook Jewellery is part of the group founded by the late billionaire Cheng Yu-tung. The company said retail sales in Hong Kong and Macau plunged 38 per cent year-on-year during the quarter ended December 31 last year. That is in addition to a 35 per cent drop in the preceding quarter.
More details in https://www.scmp.com/business/companies/...ngs-retail
* Jewellery retailer plans to close about a fifth of stores in Hong Kong’s protest-hit tourist districts to focus on growing the mainland China market
* Move signals big retailers are another ‘damning verdict’ on retail sales outlook amid political uncertainty
Pearl Liu
Published: 2:03pm, 15 Jan, 2020
Updated: 2:24pm, 15 Jan, 2020
Chow Tai Fook Jewellery Group’s decision to shut about one-fifth of its stores in protest-hit Hong Kong and focus on growing its presence in the mainland China market suggests a slump in retail sales is not about the reverse soon.
The world’s second-largest jewellery chain by market value has leases on more than 40 of its stores in Hong Kong expiring between April 2020 and March 2021, a spokesperson said in an email late Tuesday. The plan is not to renew as many as 15 of them in tourist districts such as Causeway Bay, Mong Kok and Tsim Sha Tsui, citing “macro headwinds” as a reason.
The decision underscores the grim outlook for Hong Kong’s retail industry, even as seven months of anti-government protests have subsided in recent weeks. Retail sales slumped 23.6 per cent November, following a record 24.4 per cent fall in October, while the economy slipped into a technical recession in the third quarter.
Hardest-hit goods were luxury items such as jewellery and watches, with a staggering 43.5 per cent drop, according to government data.
“The decision is 100 per cent related to the anti-government protests that have discouraged mainland tourists from coming to shop in Hong Kong,” said Louis Tse Ming-kwong, managing director of VC Asset Management. “This is another damning verdict on Hong Kong’s retail business outlook. Hong Kong retailers going northbound in their expansion will become a trend.”
Other retailers may follow to reduce the number of their shops in Hong Kong and reallocate their resources to mainland cities, which could offer cheaper rents and staff costs, Tse said. China’s leadership is also pushing for higher domestic consumption amid the rising purchasing power of the middle class, he added.
Since luxury brand Prada decided last year not to renew its lease in Hong Kong, businesses including BestMart360 and Louis Vuitton have also pulled back from the scene as social unrest dented traffic and the city’s landlords have declined to offer bigger rent reductions to alleviate the crisis.
Hong Kong went through its worst political crisis during the second half of last year, triggered by the unpopular and now-withdrawn extradition bill. As protests escalated, violent clashes with police ensued, leaving the city’s major shopping malls deserted and occasionally smashed.
The local economy is expected to contract 1.9 per cent in 2019, according to the International Monetary Fund, before eking out a small growth this year. The government has since rolled out several rounds of stimulus packages targeted at selected industries to soften the blow.
Century-old French retailer Louis Vuitton have decided to close its flagship store at Times Square when its lease expires in June this year, according to people involved in the matter. Prada, which operates a flagship store on the world’s most expensive shopping street in the world, turned down its landlord’s rent offer and will move out this June, people have said.
Best Mart360, which has had 75 of its 102 shops trashed or firebombed by hard core protesters last year, will expand its business in mainland China to reduce its reliance on the Hong Kong market, according to its founder and chairman Lin Tsz-fung. Fast Retailing Co of Japan saw its overseas sales decline by the most in a decade, partly due to protests in Hong Kong.
Tiffany & Co, the biggest jeweller, revealed last month that its sales in mainland China posted a double-digit growth in the three months to October 31, while its Hong Kong side saw “significant disruptions.” Burberry said sales in Hong Kong had fallen 22 per cent in the six months to September, while its sales in the mainland had accelerated from the “mid to high teens” in the second quarter in mainland.
The company expects to see a net addition of 600 stores in mainland China, according to its expansion plan, on top of an existing 3,636 there.
Chow Tai Fook Jewellery is part of the group founded by the late billionaire Cheng Yu-tung. The company said retail sales in Hong Kong and Macau plunged 38 per cent year-on-year during the quarter ended December 31 last year. That is in addition to a 35 per cent drop in the preceding quarter.
More details in https://www.scmp.com/business/companies/...ngs-retail
Specuvestor: Asset - Business - Structure.
