Going underground: Sogo spreads to TST
Sogo is to open a second Hong Kong department store in Tsim Sha Tsui - positive news for a retail sector hit by rising rents and high-profile closures.
Company officials said they were in the final stages of lease negotiations for the 110,000 sq ft underground Amazon shopping plaza, currently home to the Teddy Bear Kingdom. An announcement on a likely opening date is expected next month.
The expansion stands in stark contrast to the dramatic decline of its former Japanese owner, which only five years ago sought help from Japanese taxpayers for a debt burden of 1.7 trillion yen ($126 billion).
In 2001, Sogo sold its Hong Kong properties, including its 12-storey Causeway Bay flagship store, and brand rights to two local conglomerates for $3.53 billion. At the time it was believed to be the largest buyout since the onset of the East Asian financial crisis.
The new owners, the Lau brothers of Chinese Estates and Cheng Yu-tung of New World Development, took the company public in a $1.49 billion stock offering last April.
Sogo says its pre-Christmas shopping sales leapt 10 per cent over last year, while full-year sales are on track to rise 16 per cent to $3.5 billion.
The retailer is also searching for a location for a store in Macau, according to Thomas Lau Luen-hung, managing director of owner Lifestyle International Holdings.
The expansion is in sharp contrast to the demise of Kalm's, a gift-store chain that has been a staple of Hong Kong retailing for a quarter of a century. Kalm's will close its Telford Plaza outlet in Kowloon Bay today, the last of what was once a chain of 37 stores.
Last week, the three-year-old Hang Ho Seafood Hot Pot Restaurant chain abruptly closed its four outlets.
Smaller retailers are being squeezed as landlords move to cash in on the boom in retail spending, raising rents up to 60 per cent, according to the Hong Kong Retail Management Association.
Midland Realty chief economist Buggle Lau Ka-fai said a new Sogo store in Tsim Sha Tsui would add to the area's prestige.
Centaline Property (Holdings) chairman Shih Wing-ching pointed to the New World Development chairman's close connection with Lifestyle International and said the deal might be an easy way to solve the high vacancy rate in the shopping plaza.
