Hong Kong jeweller Chow Tai Fook is flexing its muscle in a softening retail rental market, in search of lease cuts of as much as 20 per cent.
The listed firm says some 30 leases throughout the territory will come up for renewal later this yr and the corporate will probably be in search of reductions within the wake of a difficult retail market which has seen gross sales plunge in some luxurious classes.
In an interview revealed on Bloomberg on-line, MD Kent Wong stated the corporate has already been granted reductions of between 10 per cent and 20 per cent in renewal negotiations this yr, however he didn’t reveal the variety of leases concerned.
He advised Bloomberg that circumstances in 2015 are “very particular”.
“We’re demand pushed; we anticipate we will have a 20 per cent rental discount.”
Chow Tai Fook has reported a fall in same-store gross sales in Hong Kong and Macau of 26 per cent within the first quarter of this yr – the fifth consecutive quarterly fall.
Wong stated his firm might shut some shops this yr – singling out its Peak outlet for instance.
The jeweller has 90 shops in Hong Kong, interesting largely to Mainland Chinese language vacationers. However customer numbers from China have been falling, and people nonetheless coming are much less prosperous than the standard guests of previous years. These with larger disposable incomes have began travelling additional afield, many spooked by the Occupy Central protests of the second half of final yr.
The mainland authorities’s clampdown on present giving has additionally affected gross sales of upper priced luxurious items in Hong Kong.
Regardless of a lower in complete retail gross sales of two.three per cent in Hong Kong in the course of the first three months of 2015, Wong expects a restoration later within the yr.
“The market basically wants six months to at least one yr to restructure the product combine catering to the altering style of consumers,” he advised Bloomberg.
“We stay optimistic about Hong Kong within the mid- to long-term.”
