Emperor Watch & Jewellery, other Hong Kong retailers face tougher market conditions, fewer mainland tourist buyers
Emperor and other retailers are trading in harsher markets and some observers say the government should step in to boost tourism infrastructure.
Emperor had a net loss of HK$120 million in 2015, compared with HK$138 million net profit the year before. Revenue fell to HK$4.43 billion, down 25.2 per cent. That was due to weak consumption in Hong Kong on the back of a strong local currency and an unfavourable tourism market, the firm said in a filing to the local bourse.
“Our revenue this year may follow the market trend and continue to fall,” said Anna Luk, the company’s investor relations director. It closed a shop on Canton Road in February and aims to negotiate rent cuts with landlords at four to six other outlets by 30 to 50 per cent in an attempt to save money.
City officials said on Thursday that local retail sales slumped 20.6 per cent in February from the same month a year before, the worst in 17 years. Sales like jewellery and watches, which depend greatly on inbound tourists, tumbled 24.2 per cent. In 2015, local retail sales dropped 3.7 per cent from a year earlier.
“We plan to expand business in south-east Asia, in places such as Thailand and Malaysia, because mainland tourists now head to those areas,” Emperor Chairperson Cindy Yeung said, responding to the worsening trade environment in Hong Kong.
She said company sales in Singapore surged 65.5 per cent last year.
Yeung said e-commerce may prove to be another driver and Emperor started today payment over the WeChat mobile applications for its Hong Kong operations. It will open an online shopping platform in July to cater to its “affordable luxury” strategy to sell jewellery under HK$25,000.
Hong Kong’s image as a tourist spot was hurt by a riot in the Mong Kok district in mid-February, Cheng said and urged the government to rebuild the tourism image thus to help retailers.
“[Overseas expansion] is a good concept, but it is hard to say whether it will take effect,” Ronald Wan, a partner at Capital International, said. “Except for Singapore, southeast Asian markets are not that free and open and there are obstacles for opening stores there.”
Wan said local government should take measures to strengthen the infrastructure and equipment of the local tourism industry when the market is sluggish.
“The mainland is upgrading their tourism industry,” he said. “Shanghai Disneyland is an example, but our government has not done much to improve the city’s competitiveness as a tourist attraction.”
Bank of America Merrill Lynch said in a recent report that the slowdown in inbound tourism will remain a drag on Hong Kong’s retail sales this year.
Weaker consumer confidence amid financial market volatility, rate normalisation by the US Federal Reserve and a softening labour market in tourism-related sectors will likely weigh on local consumption, it said in the report.
