Sincere moving its stores above ground level
Sincere is joining a parade of lifestyle retailers and eateries moving upstairs to escape soaring ground-level retail rents.
The 113-year-old department store chain will be closing its 63,000 square foot Central shop, its flagship store in Hong Kong, by the end of next month.
The firm will open a nearby 11,000 sq ft shop in Des Voeux Road in Central in September.
Sincere will also be launching a 31,000 sq ft store in Nathan Road, Mong Kok, in September and a 22,000 sq ft store in Percival Street, Causeway Bay, by the end of the year. Both will be on upper floors, reached from their street-level entrances by escalator.
"We believe choosing upstairs locations in prime shopping areas with a street entrance and visible logo will still put us in a good position," deputy chairman and chief executive Philip Ma King-huen said.
Sincere's turnover fell 5.4 per cent to HK$498 million for the year to February on lower consumer demand. Its Grand Century Place store in Kowloon has shrunk by two-thirds in area since August last year.
High-street shops' rents jumped 2.5 per cent in the first quarter this year, forcing many retailers to seek non-prime locations such as Tuen Mun, Tsuen Wan and Sha Tin, property consultancy Jones Lang LaSalle said.
Despite limited supply of retail spaces and a trend to shorter lease terms, Sincere will continue to rent prime retail locations with contracts that typically last for more than five years, Ma said.
"We have no plans to purchase retail spaces now, as rents are too high," he said. "Our usual strategy is to separate land investment and store operations."
Sincere expects to cut less profitable concession counters to offset pressure from high rents.