|
|
Hong Kong
By Mary Kavanagh
The retail market in Hong Kong continues to be challenging, in particular for jewelry, watches and valuable gifts. Sales in this category fell a whopping 19.5 percent in April compared to the same time period in 2014, recording a steeper decline than the 18.6 percent drop in March. Overall retail sales in April fell by 2.2 percent in value from a year earlier, a more moderate decline than the 2.9 percent drop in March. Caroline Mak, chair of the Hong Kong Retail Management Association (HKRMA), attributed the decrease to the decline in the number of visitors from Mainland China and a drop in the amounts visitors are spending. She expects retail sales in May to drop 3 percent to 4 percent, compared with May 2014 and noted that the downturn in the retail sector has yet to bottom out. A government spokesperson attributed the slowdown in retail sales to “weaker visitor spending on big-ticket items.”
Large retail chains are feeling the pinch. Chow Tai Fook (CTF), a leading jeweler in Mainland China, Hong Kong and Macau, and the world’s largest jewelry retailer by market value, reported a 17 percent decrease year-on-year in revenue in its annual results for year ended March 31, 2015. Gross profit declined 9.8 percent to $2.46 billion compared to $2.73 billion in 2014. The company attributed the decline in revenue to the exceptionally high base effect as a result of the gold rush in its fiscal year that ran from April 1, 2014 to March 31, 2015 and weak consumer sentiment, especially in the Hong Kong and Macau markets, from October 2014 to end March 2015. Gem-set jewelry performed well and enjoyed steady growth and high profit margins, resulting in an increase in gross profit margin for the company from 27.3 percent in fiscal 2014 to 29.7 percent in fiscal year 2015. CTF Group Chairman Dr. Henry Cheng was cautiously optimistic about the outlook for the rest of the year. “In spite of headwinds in fiscal year 2015, continuous urbanization and a growing middle class have us convinced that growth opportunities still abound in Mainland China, and the Group will continue to focus on Greater China while maintaining our leadership position throughout the region,” Cheng said in a company statement. Emperor Watch & Jewellery Ltd. also reported a drop in business for the first quarter of 2015, although did not disclose actual figures. Chairwoman Cindy Yeung said the retail chain would consider closing up to three of its 24 Hong Kong shops. One of the options could be its store on Russell Street in Causeway Bay, one of the most expensive retail strips in the world, the South China Morning Post reported. Lukfook, another of the city’s large jewelry retail chains, also reported a drop in sales in the first three months of this year. Lukfook saw same-store sales decline 22 percent in the January to March period, a further drop from the 6 percent decline seen in the previous quarter. The jeweler’s overall same-store sales posted a drop of 20 percent in the period.
Declining retail sales are impacted by the slowdown in tourists to Hong Kong in 2015. The number of overnight visitors decreased by 3.6 percent to 8.65 million from January to April, according to the Hong Kong Tourism Board (HKTB). The number of Mainland tourists staying overnight fell 6.7 percent over the same period to 1.37 million in April. In an effort to reverse the falling visitor numbers, HKTB is rolling out a $10,319,000 summer promotional campaign that will see that every visitor traveling through the airport is given a gift — including a luxury return trip to the city for a lucky few. The summer campaign in 2014 had a budget of $3,611,650, significantly less than this year’s figure. The Chinese General Chamber of Commerce organized a shopping festival from June 25 to July 3 for the second year running to boost tourist and local spending. The number of shops participating this year increased by 50 percent to about 1,500 and includes a number of jewelry chains, such as Prince Jewellery, Lukfook, and Emperor Watch & Jewellery. Emperor is offering 15 percent off all regular-priced items, except 999.9 gold products and Lukfook will offer an 8 percent discount with the purchase of any diamond, natural jadeite, pearl, gemstone or karat gold items — fixed-price, collector series items and timepieces are excluded.
Christie’s Hong Kong spring Magnificent Jewels sale was a huge success, setting three new world auction price records and a new record for the most valuable jewelry auction ever held in Asia. (See page 108 for coverage of the auction.) Tiancheng International’s June auction was also a success and achieved almost $38 million. The 268-lot sale was sold 74 percent by lot and 85 percent by value. Wang Jie, managing director of Tiancheng International, was pleased with the result and the turnout for the auction. “It was a testament to the robust jewelry auction market in Asia,” he said.Article from the Rapaport Magazine - July 2015. To subscribe click here.
|
|
|
|