Sources say domestic operation slid into the red in a rare strategic failure by a Li Ka-shing operation
Dominant local health and beauty retailer AS Watson is understood to have suffered one of its worst trading years because of rising rents, disappointing sales and a policy of aggressive discounting to win market share.
A top management reshuffle is understood to have been instigated to stem the weak performance, with sources close to the company saying Hutchison Whampoa's retail unit displayed signs of management overreaching stemming from an aggressive global expansion.
The sources said the local operation of the 178-year-old AS Watson slid into the red last year, marking a rare strategic failure by a Li Ka-shing-controlled company operating in its domestic market. But a spokeswoman denied the Hong Kong operation had lost money.
Industry players have noted that Watson's Personal Care Store has seen a high level of executive departures in recent months, including several senior managers with more than 20 years at the firm.
The health and beauty chain has carried out a refurbishment of its stores but is understood to have struggled to regain pricing power, having been forced into a cycle of promotions and discounting.