Cracks in Hong Kong’s retail industry widen as Dickson Concepts groans, MTR and Hysan extend rent concessions amid slump in tourist arrivals
- Dickson Concepts to cut the salaries of employees and executive directors, affecting about 40 per cent of its staff
- MTR Corp lowers rents by half on all its properties at railway station, shopping centres, while Hysan offers ‘meaningful concessions’
Cracks in Hong Kong’s retail industry are widening as the coronavirus fallout heaped pressure on more players while some of the city’s biggest landlords continue to lower rents for their tenants.
Dickson Concepts, operator of Harvey Nichols department stores in Hong Kong, will cut staff salaries by up to 30 per cent, joining a list of peers in cutting costs. Hysan Development and MTR Corp disclosed they have offered rent concessions in their properties to help their clients ride out the crisis.
The viral outbreak has slammed tourist arrivals this year, especially among mainland Chinese who have become the industry’s lifeblood in recent years. The biggest public health crisis since 2003 follows months of social unrest in 2019 that sank the economy into the first contraction since the global financial crisis in 2009.
“The group’s retail business across all categories has deteriorated further significantly since the outbreak of the coronavirus in January 2020,” extending the pain from the second half last year, Dickson Concepts said in a statement on Thursday. It may consider closing some of its stores temporarily as an additional short-term cost saving measure, it added.
Raymond Cheng, head of Hong Kong and China research at CGS-CIMB Securities, expects visitor arrivals and retail sales to plunge by about 25 per cent year on year in 2020. Retail rents could fall by 20 per cent this year, according to CLSA and JP Morgan.