The retail slump hit fashion chain Theme yesterday when it closed most of its Hong Kong shops and cut about two-thirds of its frontline staff. The Shop Clothing Ltd, a wholly owned subsidiary of the financially crippled Theme International, said it had shut 23 of its 32 outlets and laid off 86 sales staff. Shops in Macau, the mainland and Taiwan remain open. Company chairman and chief executive, Kenneth Lai Hin-fung, said the move had been sparked by the collapse of negotiations to cut rents. He said rent accounted for about half of operating costs but none of the 20 landlords was willing to reduce them. Mr Lai said closure was the only sensible option. 'Closing down the shops now will hopefully enable the group to return to make profits. We would like to thank the staff . . . and we are very sorry that we have to let them go, but the circumstances are out of our control,' he said. Mr Lai said the company would continue to negotiate with the landlords and re-employ laid-off staff if shops were reopened. But he would not rule out further redundancies, saying this depended on market conditions. Chief operating officer Charing Choi Yat-ling, said the streamlining could extend to the mainland and Taiwan. 'We will consider closing down any shop which is making losses.' Yesterday, staff at the closed shops were busy packing up. Posters explaining the decision and listing the shops still open were posted at the doors. The sacked employees will receive a payout totalling about $3 million. Last week fashion chain G2000 cut wages for 600 staff.