Abercrombie & Fitch to shut Hong Kong store in wake of economic downturn
US fashion retailer to hand back iconic Pedder Street building as number of mainland shoppers slides
US fashion chain Abercrombie & Fitch will close its four-storey flagship store in Central as early as next year amid the economic downturn and a slump in shoppers from the mainland.
The 25,600 sq ft store on Pedder Street opened in 2011, paying HK$7 million in rent per month, double that of previous tenant Shanghai Tang.
It has initiated an early exit before its lease expires in 2019.
“The company exercised a lease kick-out option for its A&F flagship store in Hong Kong,” the retailer said on Friday. It claimed the move was “part of the company’s ongoing strategic review” and “was expected to drive economic benefit over time”.
The closure of the store should be “substantially complete” by the end of the second quarter of fiscal year 2017.
The move would trigger a “lease termination charge” of approximately US$16 million in the next quarter, it said.
There would be no Abercrombie & Fitch branded store in the city after, but the company intended to add five stores on the mainland by the end of January.
Comparable sales of the brand fell 14 per cent between August and October compared with the same period last year.
It did not reveal its sales performance in Hong Kong.
The city’s retail sales slumped 9.6 per cent in the first nine months of the year.
Helen Mak, senior director and head of retail services at researcher Knight Frank, said Hong Kong was gradually losing its appeal to mainland tourists as a prime shopping destination after 10 years of high retail growth.
She said many retailers had expanded aggressively a few years ago when the Chinese economy was strong and shoppers poured into the city.
“Many retailers were optimistic about the market outlook at that time ... But they may not be able to afford it now,” Mak said.
Earlier this month, US fast-fashion brand Forever 21 said it would close its flagship store in the heart of the Causeway Bay shopping district late next year.
Coach, another premier US brand, also closed its four-storey main store in Central last year amid weak retail sentiment.
“Hong Kong is not too special a place for shopping in Asia. Many mainland shoppers now choose to go elsewhere in the region, such as Japan, South Korea and Taiwan.” Mak said.
Last but not least, the yuan depreciation had also hit retail businesses, as a declining yuan made Hong Kong goods more expensive for mainland shoppers.