Sales of luxury products have declined in Hong Kong due to fewer visitors from the mainland. (Photo : Reuters)
Chow Tai Fook Jewellery Group Ltd., the largest jewelry retailer in China by market value, is likely to close five or six Hong Kong stores in the fiscal year that ends on March 2016, Reuters reported.
On Friday, managing director Kent Wong said that the company would try to negotiate lower rents when it renewed leases. If rents were not reduced in key tourist areas in the city, including Causeway Bay and Tsimhatsui, stores would have to close.
"Hong Kong remains challenging because of the strong Hong Kong dollar," said Wong over a telephone conference call. "Same-store sales for the current quarter and on the coming Chinese New Year in Hong Kong can be a decline as we see no sign of recovery yet."
According to Chow Tai Fook, its overall retail sales fell 11 percent in value terms during the fourth quarter of 2015, as compared with a 10-percent decline from a year earlier. This has been attributed to a fall in the number of tourists coming from mainland China as well as weak local consumer spending.
The company's retail sales in Hong Kong and Macao fell 20 percent during the quarter. Its retail sales on the mainland fell 6 percent.
Same-store sales dropped 15 percent overall during the quarter, with the mainland falling 6 percent and Hong Kong and Macao falling 23 percent.
The data followed Hong Kong's announcement of a 7.8-percent fall in retail sales in Nov. 2015, making it the ninth consecutive month of decline.
Jewelry and watch sales dropped 20.6 percent after falling 17 percent in October.
Retailers of luxury products are suffering due to fewer visitors from mainland China.
Coach Inc. closed its main store in Hong Kong in August.
Italy's Prada SpA reported a fall in August-October profit of 38 percent in December.
With the prospect of a cycle of interest rate rises driving fears of capital outflows, potentially pressuring the Asian financial hub, Hong Kong is bracing for greater economic challenges. The Hong Kong dollar has also made the city expensive for tourists.
