Hong Kong’s largest mall operator says retail sales are recovering
Owner of Hong Kong’s Harbour City and Times Square shopping malls records 12pc rise in total revenue to HK$20 billion for the six months
Wharf Holdings, which operates Hong Kong’s largest shopping mall, said luxury brand sales have bottomed out after retailers slashed prices to offset the slump in the number of mainland tourists.
“In June and July, some high-end brands saw sales declines narrowing or even improving on a yearly basis, ” vice chairman Doreen Lee Yuk-fong said while announcing the interim results on Wednesday.
Despite the challenging economic environment, Lee said foot traffic improved by 10 per cent on a yearly basis during the first six months at its flagship Harbour City mall, Hong Kong’s largest shopping complex, in Tsim Sha Tsui.
“We have put a lot of effort into boosting traffic, including promotions in other Asian countries, such as Philippines and India, to offset the losses incurred by brands from offering discounts,” Lee said.
“We are cautiously positive about future market prospects,” she said.
The Hong Kong conglomerate with interests in property, infrastructure and telecommunications, posted better-than-expected core interim profits on higher rental income and property sales in the mainland.
Underlying profit, excluding fair value and exchange factors, rose 14 per cent to HK$5.97 billion, while revenue grew 12 per cent to HK$20.02 billion for the six months.
Net profit, on the other hand, fell 3 per cent to HK$6.72 billion, or HK$2.22 basic earnings per share, due to lower yields from investment properties and exchange losses.
The company said it would hike interim dividend by 5.4 per cent to 58 HK cents per share.
Gross rental income from its Hong Kong property portfolio – including the company’s core assets Harbour City and Times Square in Causeway Bay, one of the world’s most expensive locations – saw a 7 per cent growth to HK$6.44 billion.
But tenant sales at Harbour City slumped 14.7 per cent during the period to HK$13.3 billion, while at Times Square they dropped 15.7 per cent to HK$3.9 billion.
The company said in a statement that Harbour City tenants’ sales began to stabilise in the second quarter, with retail occupancy maintained at “virtually 100 per cent”.
Meanwhile, its mainland property sales contributed HK$1.31 billion in income, an 18 per cent growth from a year ago.
Hong Kong’s retail sales plunged 10.5 per cent in the first half of this year – the worst drop in 17 years – as mainland Chinese tourists abandoned the city’s shopping malls, Disney resort and other theme parks.
Alan Jin, a property analyst at Mizuho Securities, said it would be hard to predict when Hong Kong’s retail sector will regain its strength.
“The sharp decline in the number of mainland visitors is still a big blow. Though the tourist numbers has started to recover, most of the visitors are from lower tier cities and hence their spending power is not as strong as earlier,” Jin said.
Wharf shares have risen 44 per cent in the past six months. It closed 1.88 per cent lower to HK$52.2 on Wednesday in Hong Kong.