Retail rents in prime areas are under renewed
pressure as high-end fashion brands feeling the pain of lackluster
consumer sentiment and falling numbers of mainland shoppers seek rent
cuts.
Business is getting tougher for Hong Kong’s retailers with the value
of total retail sales dipping 1.6 percent in the first half of 2015 from
a year back, according to the Census and Statistics Department’s latest
data.
Valuable gifts, including jewelry, watches and luxury goods, were
hardest hit, with sales falling for 10 consecutive months. Sales value
slumped 10.4 percent in June compared with a year earlier, despite
efforts by several luxury brands – including Italian fashion house Prada
– to boost sales by cutting prices.
Squeezed by slimmer pickings in Hong Kong and the mainland market,
top global luxury brands are looking to renegotiate store rents to cut
costs.
The latest to plead for landlords’ mercy was French luxury goods
conglomerate LVMH. Revenue from its signature brand Louis Vuitton
slumped 10 percent year- on-year in Hong Kong, Macau and China for the
first half while Europe and the United States saw stronger sales of
fashion and leather goods.
It is also planning to close a directly operated shop of its biggest
watch brand, Tag Heuer, in Causeway Bay. “I’m not sure if the shop will
be closed this year or next but for sure I want to close it because of
high rental costs and a drop in traffic,” chief financial officer
Jean-Jacques Guiony told Reuters on Monday.
British high-end fashion house Burberry, which has 16 shops in the
SAR, said it may trim its local store network and negotiate for lower
rents after the Hong Kong market, which accounts for about one-tenth of
the brand’s total sales, saw a double-digit percentage fall in sales
over the period.
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davidstockmanscontracorner.com / By Frances Sit and Adam Xu at The Standard / August 8, 2015
Monday 10 August 2015
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