Adidas shuts down store in Hong Kong’s Central prime business district

Name: Hong Kong’s UA Cinemas close after coronavirus pandemic puts ‘devastating pressure’ on chain
Uploaded: 2021-04-21T11:40:26.000Z
Duration: 1 min 20 s
Description: Hong Kong’s UA Cinemas close after coronavirus pandemic puts ‘devastating pressure’ on chain

Not surprising to see major retailers closing down, especially their prime flagship shops, Colliers executive says

Local bank may lease the premises for almost 54 per cent less: Midland analyst

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The Adidas store, at 36 Queen’s Road, which has now shut down. Photo: Nora Tam

Cheryl Arcibal

Published: 7:40pm, 21 Apr 2021Updated: 11:59am, 22 Apr 2021

Adidas is exiting Hong Kong’s Central prime business district. The German sportswear giant signed a HK$4.34 million a month, or HK$52.1 million a year, lease for the 13,000 sq ft shop at 36 Queen’s Road in 2015. Removal staff were seen dismantling shelves and putting away stock on Wednesday.

“After a thorough review we have decided to close the Adidas Brand Center on Queen’s Road,” the company said on Wednesday. “We continue to have a strong presence in Hong Kong, with more than 20 Adidas stores and multiple franchise stores.”

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Hong Kong’s UA Cinemas close after coronavirus pandemic puts ‘devastating pressure’ on chain

Adidas is potentially following in the footsteps of Gap, Topshop and Esprit, brands that have either shut shop in Central or exited Hong Kong altogether. International brands that rely heavily on mainland Chinese and other tourists for sales in Hong Kong have found themselves unable to sustain business operations after the city essentially closed its borders early last year to combat and contain its coronavirus outbreak. Visitor arrivals dropped by about 94 per cent last year to 3.57 million. Retail sales too fell, by 24.3 per cent to HK$326.5 billion.

“It is not surprising to see major retailers closing down, especially their prime flagship shops,” said Hannah Jeong, head of valuation and advisory services at Colliers International in Hong Kong. “Despite a 25 per cent drop in overall retail shop rents, and some prime street shops facing up to a 50 per cent reduction in rents, operations costs including rental expenses are still not yet sustainable, given the large cuts in revenue.”

Rents on Russell Street in Hong Kong’s prime shopping district Causeway Bay stood at US$2,671 per square foot in 2018. By the second quarter of 2019, it was the world’s most expensive shopping avenue, with rents at US$2,745 per square foot a year on average, according to commercial real estate services firm Cushman & Wakefield. The city’s exorbitant rents coupled with plunging retail sales have made business operations unviable for many retailers.