Hong Kong Retail Sales Sasha Has Not Lost

Hong Kong retailers are also experiencing a difficult time with the declining retail industry in Hong Kong. For the six months ended September 30, 2015, the net profit of jeweler Chow Tai Fook (01929.HK) fell by 42.4% year-on-year to HK$1,557 million. Sa Sa (00178.HK)’s net profit also fell by 55% to HK$153 million. The two companies' views on the retail market are also relatively conservative. Zhou Dafu ** Zheng Jiachun also said that he will speed up the closing of stores in the second half of the year to improve operational efficiency.

According to Chow Tai Fook’s half-year financial report, the company’s turnover for the six months ended September 30, 2015 was HK$281.24 billion, a decrease of 4.1% year-on-year, while overall same-store sales fell 8.7%. Among them, same-store sales in Hong Kong and Macau decreased by 18.2%, causing the company's net profit to plummet by 42.4% to HK$1.557 billion.

Such performance was mainly due to the serious decline in Hong Kong and Macao operations, which accounted for 40.8% of the company's turnover. According to the Hong Kong government data, the value of Hong Kong jewellery sales fell by 13.5% in 2015, while Mainland visitors to Hong Kong and Macau dropped by 3.4% and 4.3% respectively.

Chow Tai Fook said in the semi-annual report that the decrease in turnover and retail value was mainly due to the continued weak consumer sentiment in the retail market, which reduced the number of tourists from Mainland China to Hong Kong and Macau. According to Chow Tai Fook's installed flow sensors at selected retail outlets, the traffic volume of Zhouda Ford's selected stores dropped by 31.2% year-on-year.

Sa Sa is even less optimistic. In the six months ended September 30, 2015, the company’s net profit fell by 55% to HK$153 million. The company’s turnover also fell by 10.6% to HK$3.78 billion during the period, with Hong Kong and Macau’s retail sales falling by 11.1%. , to 3.01 billion Hong Kong dollars.

Sasha said in the announcement that the company’s retail sales in Hong Kong and Macau fell by 11.1% due to the decrease in the average amount of transactions and the number of transactions per domestic passenger, and also related to the decrease in the number of domestic visits to Hong Kong. At present, the combination of domestic tourists visiting Hong Kong tends to come from low-tier cities with weaker spending power, resulting in a structural change in Hong Kong's tourism industry, affecting the average sales of each transaction.

Sa Sa believes that Hong Kong tourism industry is gradually losing its competitiveness as other tourism destinations are actively strengthening tourism packages and providing convenient tourism policies to increase the attractiveness of Mainland tourists. Coupled with the rise of cross-border e-commerce, the shift in consumption patterns has increased, which has also had a significant impact on the company's performance.

Although Hong Kong's retail rental prices have been declining, closing shop seems to be their only choice in the face of continuous decline in turnover.

Chow Tai Fook netted 3 stores closed in Hong Kong in the first half of the fiscal year. Zheng Jiachun stated that this move was intended to integrate Hong Kong's retail network. Stores closed were mainly stores that were not in line with operating standards or were over-stocked. Regional closing shop. The company will continue to integrate the retail network in the Mainland and Hong Kong markets. Hong Kong District expects to close 10 underperforming stores throughout the year.

Sa Sa is also closing stores at the same time. The company consolidated its retail network in the first half of the fiscal year, and the number of stores decreased from 287 to 281. Because the turnover of many tourist areas has dropped so badly, the company decided to enter the non-tourist area, firmly grasping Live in the heart of local guests.

Guo Shaoming, the company’s chief executive officer and chief executive, said in Hong Kong’s performance meeting that as of the third fiscal quarter of last week, sales of the company’s Hong Kong and Macau operations had fallen by 13% to 14%, of which 95% of sales fell from Tsim Sha Tsui, Causeway Bay and Mong Kok three traditional tourist areas, so the company will speed up the opening in non-tourist areas. In the first half of the fiscal year, the company opened five new stores, of which four were residential and only one was located in Causeway Bay.

Zheng Jiachun emphasized that the company has no intention to lay off employees and will deal with the number of employees through natural losses. It is hoped that the quality of employees will be sorted out and resources will be concentrated to enhance the sales and profitability of the stores.

Guo Shaoming said that in the past three months, more than 10 retail companies distributed profit warnings, indicating that the industry's prospects are very serious. At present, the Hong Kong market not only has a decline in overall turnover, even the average income of front-line employees fell by 15% to 20%. He is worried that the situation will continue to affect consumer sentiment and further slow down the Hong Kong economy.