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Denise Tsang

The parent of retailer Duty Free Shoppers Hong Kong (DFS) is set to make an announcement today responding to reports it plans to axe one-fifth of its Hong Kong staff, according to top executive Philip Kung.

 DFS is rumoured to be about to cut 300 jobs out of 1,900 after shedding 90 staff in February.

 The company is the latest in a series of high-profile retailers such as Joyce Boutique Holdings, Yaohan Hongkong Corp and Matsuzakaya to suffer from the slump in the retail sector and tourist arrivals in Hong Kong.

 'Our parent in San Francisco will make an announcement tomorrow morning. I'm afraid we can't comment until the announcement is out,' said Mr Kung, who is DFS vice-president for retail stores and development.

 DFS is the Hong Kong arm of US-based DFS Group, which is in turn controlled by French luxury goods group LVMH.

 Sources said DFS had been hit hard by the tourist downturn in Hong Kong since the handover and particularly by the absence of the bigger spending Japanese and South Korean tourists.

 They said DFS had recently hired several retail experts in a bid to restructure the company's operations.

 These include Mr Kung, who was formerly HMV managing director, and DFS Hong Kong president Fred Chiu, who was previously the Airport Authority's general manager for retail.

 Hong Kong Tourist Association statistics showed South Korean visitors tumbled 74 per cent and Japanese visitors were down 64 per cent in January compared with the same month last year.

 Indosuez W I Carr Securities Asia associate director Alan Wong Tin-lun said: 'This has a significant impact on areas such as Tsim Sha Tsui. Hotels are empty, shops are empty, too. I'm not surprised by the lay-offs in the industry.'  DFS has six outlets scattered entirely in tourist areas such as Tsim Sha Tsui, Kai Tak airport and the Peak.

 'Only misinformed shoppers will buy at duty free stores as every Hong Kong resident knows Hong Kong is a tax-free port,' Mr Wong said.

 DFS had also suffered because of its concentration on luxury goods such as clothes and perfumes, he said.

 Hong Kong Retail Management Association chairman Philip Ma King-huen said the retail slump might worsen in coming months as consumers appeared to be reluctant to spend for the summer.

 'Retail sales in spring and summer are expected to remain poor. The lacklustre performance lingered after the Lunar New Year, and we expect sales in February to have dropped by 20 per cent,' he said.

  Retail sales slumped 12 per cent in January after taking inflation into account, the Government said last week.

 Retailers have been suffering since the sharp consolidation in the property and stock markets in October, resulting in a loss of more than 3,000 industry jobs.

 The largest number of job losses was prompted by the closure of Yaohan Department Stores, with 2,700 redundancies in nine outlets in Hong Kong.

 Joyce also sacked 16 per cent of its 550 staff in February, while Japan-based Matsuzakaya plans to shut down its 23-year-old Causeway Bay department store in August, leaving an estimated 155 staff jobless.



DFS to clear air over job loss rumours