Chain that once boasted 37 HK shops closes its Telford Plaza outlet tomorrow Kalm's will shutter the last of its once 37-strong chain of Hong Kong gift shops tomorrow, dealing the second major blow to the still-fragile retail sector in less than a week. Representatives of the Cosdel Group, which operates Kalm's as its retail arm, declined to comment on the closure. No details were revealed concerning the number of staff affected or the fate of its customer-loyalty programme. On Wednesday, the three-year-old Hang Ho Seafood Hot Pot Restaurant chain abruptly closed its four outlets, leaving more than 200 staff with unpaid wages of at least $3 million. The imminent closure of Kalm's, which specialises in greeting cards and novelty gifts featuring popular Sanrio characters including Hello Kitty, caught the public by surprise. Regular and new customers were lured to the Kowloon Bay outlet yesterday in search of bargains. About 40 people were spotted queuing outside the store in Telford Plaza, while about 30 customers were inside snapping up products that were discounted by up to 70 per cent. Housewife Esther Lee emerged from the store with two picture frames after about 30 minutes of shopping. The frames were on sale at $29 each, down from $99. 'I was just walking by and noticed people queuing outside the shop,' Ms Lee said, adding that she was shocked by the closure. Another customer, Tong Lau-kuen, said she was shopping for a water bottle for her baby. 'I'll spend a few hundred dollars just because it is the final sale. But I don't plan to buy any Sanrio products.' Jennifer Tsang Cheung-nga, a secondary school student and regular customer, said she was saddened by the news. She expected to spend $500 on greeting cards, hats and candle stands. Bankee Kwan Pak-hoo, chairman of the Hong Kong Retail Management Association, warned that retail rents had been rising disproportionately to the improvement in consumer spending at shops. For select ground-floor shop space, rents had jumped more than 50 per cent, he said. Rent typically accounts for between 40 and 70 per cent of total overheads. But he denied the back-to-back closures of Kalm's and Hang Ho signalled a renewed downturn in the sector. 'It was just a commercial decision to close down,' Mr Kwan said. 'You really need to see what their individual business model is since business growth and outlook are different for everyone.' Mr Kwan pointed out that gift shops like Kalm's were usually located in major shopping malls and that upward pressure on rents may have contributed to the decision to close the shops. He believed the lease on the Kowloon Bay outlet was up for renewal this year. Kalm's operated up to 37 stores in Hong Kong but has steadily scaled back its retail network in recent years. On September 30, 2003, Kalm's vacated its prime spot in the basement of The Landmark, while the Times Square store has also since closed.