HK retailers bullish on expansion and turnover
22 February 2005
South China Morning Post

Hong Kong retailers have ranked as the most bullish in the region, with nearly 90 per cent of the companies surveyed planning to expand this year, despite soaring rentals, according to Jones Lang LaSalle.

In its first survey on retail sentiment in Asia excluding Japan and India, the international property consultants found 71 per cent of Hong Kong respondents expected higher gross turnover compared with the regional average of 61 per cent.

The survey, conducted in November last year, covered 34 retailers in Hong Kong, 20 in Greater China and 26 in south Asia.

Jones Lang LaSalle managing director Fung Kin-keung said that although retail space would be in greater demand this year, most retailers were worried about rent rises, which he estimated at up to 15 per cent in Hong Kong this year. Sandy Li

Dragonair Traffic

A full month of lead-up to the Lunar New Year saw Hong Kong Dragon Airlines (Dragonair) enjoy increased demand for business and leisure travel last month.

Hong Kong's No2 airline flew 338,903 travellers across its Asia-based network, down more than 14 per cent from December but eclipsing last year's passenger total by 1.6 per cent.

Freight volumes, which had a weak base to compare against due to the timing of the Lunar New Year last year, surged 56.4 per cent to 29,759 tonnes.

"The result was especially pleasing on the passenger side as we were able to surpass the figure set in a month when the Lunar New Year holiday fell last year," Dragonair chief executive Stanley Hui Hon-chung said. "Individual travel primarily for business remained strong [last month], reflecting the improved economic environment."

Dragonair achieved the results while offering 34.9 per cent more cargo-carrying capacity across its fleet and a 3.7 per cent increase in available seating. Russell Barling

3 banks line up to launch credit cards

ABN Amro Bank and Hang Seng Bank launched their own credit cards yesterday, while the Hong Kong branch of Shanghai-based Bank of Communications (Bocom) hopes to launch its first credit card in the city this year.

Hang Seng united with Japan Airlines International to launch the JAL Hang Seng Card, which allows customers to earn air miles.

William Leung, the general manager and head of wealth management of Hang Seng, said: "The economic recovery helps encourage card spending and reduce the risks of bad debts in the industry."

Bocom, which has operated in Hong Kong for 71 years, previously issued credit cards with the help of Bank of China.

"We are planning to launch our own credit card. We are hoping to do this as soon as possible," said Xu Chengfa, the deputy general manager of Bocom's Hong Kong branch. "It is an integral part of our efforts to expand our retail banking and wealth management services." Enoch Yiu and Bei Hu

Bloomberg

Tourism drives explosion in retail outlets
From Central to Kwun Tong, designer stores are opening and malls are offering a dizzying array of options as the sector recovers
Carrie Chan
29 March 2005
South China Morning Post

Die-hard fans of designer labels are getting more choice as new shops open, some featuring brands new to the city.

The stores are also spreading their reach to areas not previously known as shoppers' paradises, such as the one-time industrial heartland of Kwun Tong.

Operators say the shops are moving in to take advantage of the recovering retail market and the surge in visitors from the mainland, expected to be given a boost when Disneyland opens in September.

Japanese jeans brand Evisu, French jeweller Mauboussin, Bally and Versace have joined Lane Crawford's 82,000 sq ft store to tempt shoppers at the Two IFC mall in recent weeks. It is Evisu's first concept store in the city.

France's oldest couture house, Lanvin, has rented space in the mall for its women's and menswear outlets, while Italian clothing boutique Loro Piana and luxury watch brand Chopard also plan to open stores.

A spokeswoman for the shopping mall said the tenancy rate was about 98 per cent and would hit 100 per cent in the middle of the year. The number of stores has grown from about 60 two years ago to more than 100.

At The Landmark, after a two-year makeover, new Dior, Fendi and Celine stores have opened. British-based shoe designer Jimmy Choo has opened his first Hong Kong store there.

American designer Michael Kors and British department store Harvey Nichols will also open shops at The Landmark.

Retailers are expecting a boost in tourist business when the new Landmark Mandarin Oriental hotel - one of the first boutique hotels in the city - opens in July.

Meanwhile, the new Kwun Tong mall APM, which is aiming its marketing efforts at trendy young shoppers, will be launched next month. The mall will be open until 2am and is part of the Millennium City commercial complex. About 60 of its 100 tenants have already opened for business.

Apart from featuring Japanese lifestyle store Muji, the mall will feature a 33,000 sq ft Jusco store - a pure supermarket rather than department store. Benetton will also have its first Asian store selling bags and accessories.

"We have also brought in Lazy Susan from Japan and the young line of L.S. Collection selling accessories," a spokeswoman for the mall said.

At Festival Walk in Kowloon Tong, fashion giant I.T. has taken over the space of the Great supermarket, while American designer Marc Jacobs has opened its first Kowloon boutique at the mall.

I.T. has not said whether it will close its two stores in the same mall. Its rival Joyce has announced plans to expand its Central store.

Kwun Tong mall lures midnight shoppers
SHKP expects up to 100,000 people per day to visit APM over the Easter holiday
Foster Wong
26 March 2005
South China Morning Post

Shopping until midnight, it seems, is better than watching television and up to 100,000 people are expected to flock to Sun Hung Kai Properties' APM mall each day over the Easter holiday.

The developer said 60 tenants, or about 40 per cent of the total, have opened for business in the shopping centre, which is part of the fifth phase of its Millennium City commercial complex in Kwun Tong.

Since the first shop opened on March 16, an average of 70,000 people daily had visited the centre, said Maureen Fung Sau-yim, a deputy leasing manager at Sun Hung Kai Real Estate Agency. A soft launch is planned for next month.

"Shoppers' response for the idea of late-night shopping has been positive so far because many people just don't have much time to shop and relax after long working hours," Ms Fung said.

"We will have the soft opening for the APM mall by the middle of next month, when 80 to 90 per cent of the tenants move in."

Ms Fung expected the mall's daily traffic to reach 200,000 people when all 150-plus shops open.

Ninety-nine per cent of the total 630,000 square feet of the mall's retail space has been leased. Ms Fung said tenants for the remaining 1 per cent were still being selected.

APM tenants pay a monthly rent of $80 to $200 per square foot. They will generate approximately $240 million annual rental income for SHKP, Ms Fung said.

She added the rental level at its APM mall was comparable with SHKP's flagship mall, Grand Century Place in Mongkok.

In terms of APM's tenant mix, Ms Fung said 70 per cent of the shops are retail outlets, the rest food and beverage outlets and entertainment.

Located next to the Kwun Tong MTR station, the name APM is a play on the initials representing the morning and afternoon. The mall's retail tenants open from 11am until midnight to allow people to shop for fashion and groceries.

Malls in Hong Kong usually close at 10pm.

Restaurants in the APM mall are contracted to open until 2am and entertainment spots, including karaoke bars, can operate until dawn.

Anchor tenants signed up so far included Aeon, which will operate a 33,000 sq ft Jusco store - the largest supermarket in the district. Other prominent tenants include Japanese lifestyle store Muji and a 500-seat CitySuper food court.

Mega malls spreading east
Developers intend to build huge shopping centres to cater to growing populations in urban hubs
Sandy Li, Foster Wong and Peggy Sito
30 March 2005
South China Morning Post

Hong Kong's retail landscape is set to undergo a dramatic change as major developers plan to build mega malls in decentralised locations, particularly areas with explosive population growth.

More than 70 small shopping centres of less than 100,000 sqft - accounting for 40 per cent of the city's total - will come under severe competitive pressure.

Mega malls will focus on east Kowloon, which accounts for about a sixth of the city's population of nearly 7 million people.

Kerry Properties' Enterprise Square Five in Kowloon Bay will have 1.18 million sqft of retail space - making it the largest new shopping mall since the opening of the 1.1million sqft Cityplaza in Taikoo Shing in 1987.

According to Colliers International, other large malls include Harbour City in Tsim Sha Tsui which, since 1966, has been gradually developed into the present 1.9 million sqft mall, and New Town Plaza One in Sha Tin, which started out with 1 million sqft in 1984 and was expanded to 1.4 million sqft in 1990.

Henderson Land Development said last month it would build a 1million sqft office/retail project in Kwun Tong.

Great Eagle Holdings assistant director Adrian Lee Ching-ming said mega malls were a rising trend in Hong Kong.

"Size does matter. If you are looking for one place where you can shop, dine and relax, a mega mall will have it all. This will help attract huge traffic, especially when it is in a shopping district," he said.

Great Eagle owns the 600,000 sqft Langham Place Mall, which is part of the hotel-office-retail hybrid development Langham Place in Mongkok.

"Shopping malls of less than 100,000 sqft are likely to feel the competitive pressure from mega malls," Mr Lee said.

According to Collier International, about 40 per cent of the 158 malls in Hong Kong have less than 100,000 sqft of space, and most of these are in decentralised locations.

Colliers International research director Simon Lo Wing-fai said: "[Small shopping malls] will gradually be squeezed out of the market, particularly those that only serve several residential blocks."

Mr Lee said malls in some off-beat districts would have unique features to draw shoppers' attention. Kerry Properties' 19-storey mega mall, tentatively named Mega Box, will dedicate whole floors to market segments such as home furniture, lifestyle, food and beverages and even car sales, according to the developer's internal magazine.

A vehicle mall, a cinema complex, an amusement arcade and a large skating rink that doubles as an ice hockey venue will make it a destination people will go to even if they do not have shopping in mind, according to the magazine.

Accessibility will be helped by innovative looped ramps providing vehicle access and parking up to the 17th floor.

Mega Box is part of Enterprise Square Five, which will have 407,956 sqft of office space and will be completed in the second quarter of 2007.

Brian Honda, senior vice-president of Jerde Partnership, the architect of Mega Box, said: "It will be a high-rise power centre that doesn't really exist in any form in Hong Kong yet and probably never will anywhere else, even in the United States."

Many international and local brands had already secured whole floors in the centre of 100,000 sqft, he said.

Sun Hung Kai Real Estate Agency deputy leasing manager Maureen Fung Sau-yim said new malls would cater to new towns, where population growth in Hong Kong would concentrate.

Tseung Kwan O alone has the capacity to accommodate 480,000 residents. In 2001, 260,000 people lived there.

Plans to move to decentralised locations, particularly east Kowloon, were also being fuelled by transport costs, Ms Fung said.

"Because of expensive transport costs, people living in these districts may prefer to do their shopping nearby."

Trendy facelift for World Trade Centre
30 March 2005
South China Morning Post

Trendy spas, book stores, beauty salons and entertainment facilities will take up space at the World Trade Centre in Causeway Bay in 2007.

Shopping mall owner Sun Hung Kai Properties last week announced it would convert nine office floors at the centre into retail space.

The plan follows further increases in local and tourist spending.

The growth in retail trade is expected to push up rents in Causeway Bay, which is already Asia's most expensive retail rental location.

Sun Hung Kai Real Estate Agency deputy leasing manager Fiona Chung Sau-lin said the firm had made the decision after a market survey indicated a growing demand in Causeway Bay for trendy goods.

The developer had received proposals from potential tenants interested in taking up space in the new retail levels after they were completed in 2007, she said.

Ms Chung said there would be a unique trade mix in the mall, which would feature "concept stores" with specific themes.

"We have to create new looks constantly because of intense competition in the retail market," she said.

The centre currently has 38 office floors above six retail levels. The conversion will increase its retail space 68 per cent to 270,000 sqft. The conversion will start once current leasing agreements expire.

In all, the transformation would add 110,000 sqft of retail space, Ms Chung said.

Wednesday April 27, 5:34 PM
Investors shop for bargains in hot Hong Kong retail sector
By Tara Joseph

HONG KONG, April 27 (Reuters) - Stock investors looking for bargains in Hong Kong's shopping boom may find better deals at the city's commercial landlords.

Cash registers are ringing as mainland Chinese tourists flock to the city and local consumers loosen their purse-strings, allowing building owners to jack up rents as leases expire.

Hongkong Land , the dominant landlord in the city's prime Central district, is raising rents for the first time in years, spurring a 60 percent share price rally in the past year.

The stock remains a favourite of some watchers.

"Stick with the mighty dragon," says a Morgan Stanley research report reiterating its buy call on Hongkong Land with a price target of US$3.25 on the shares, implying upside of about 15 percent from Tuesday's close.

Nearly half a million visitors from mainland China are expected to visit Hong Kong for the upcoming Chinese Golden Week holiday alone, with tour buses clogging the already fume-choked streets of key shopping areas.

Some analysts also like property investment firms such as Swire Pacific , Wharf Holdings and Hysan Development , the dominant landlord in the bustling Causeway Bay district.

Among retailers, cosmetics group Sa Sa International and jeweller Chow Sang Sang are favourites of mainland Chinese shoppers -- and some Hong Kong investors.

"I'm struggling to think of a name of retailer we don't like," said Paul Mckenzie, retail analyst at CLSA.

Hong Kong Disneyland, due to open later this year, is expected to help sustain the tourism boom. It is forecast to help lift 2005 tourist arrivals by over 5 percent to over 23 million this year -- more than three times the city's population.

"Disney is an underestimated phenomena for Hong Kong. Tourism is a permanent trend," said Daryl Goh, strategist at HSBC.

LOCAL SPENDERS

An improving local economy is also lifting the spending power of shopping-mad Hong Kongers, providing another stimulus for the retail revival.

Retail sales in the city rose nearly 10 percent by value in the first two months of 2005 from a year earlier as local residents enjoyed higher spending power thanks to an improving economy, largely due to rising trade ties with mainland China.

"There's scope for Hong Kong resident spending to accelerate," said CLSA's Mckenzie.

Commercial rents, which often linked to turnover in Hong Kong, are seen rising by up to 20 percent this year as firms report near-full occupancy rates in their glitzy malls.

Property-focused conglomerate Wharf, with shopping space in the tourist heavy districts of Causeway Bay and Tsim Sha Tsui, is seen as well-positioned to cash-in on the spending boom.

Nomura International rates Wharf Holdings a "strong buy" and said it has raised current valuations for the group's retail properties by HK$2.19 per share to HK$10.29 each.

Wharf shares have risen 13 percent in the past year.

Both Swire and Wharf trade at forward P/E's roughly in line with the Hang Seng index average of 14 times earnings. But Hongkong Land trades at 35 times forward earnings, making it the most expensive among Singapore-listed property stocks.

BUYING RETAIL

Shares in retailers have grown expensive as sales and profits surge, and rising rents threaten margins. Rising local spending power, however, warrant a second look for some retail stocks.

"We're outperform on the sector because of the domestic growth story," said Mohan Singh, retail analyst at BNP Paribas Peregrine.

Singh favours Lifestyle International which saw its 2004 earnings rise 61 percent. The firm owns the landmark Sogo department store, and recently rented 115,000 square feet of retail space in the Tsim Tsa Tsui district.

"Lifestyle is my top pick if you want a pure Hong Kong play," he said.

Small-cap Bonjour Holdings is regarded as attractive by some, based on both valuations and the domestic growth story. Bonjour, which sells upscale French and Japanese beauty products to fashion conscious Hong Kong women and has several local beauty salons, trades at 12 times forward earnings.

Sa Sa, by comparison, trades at 30 times earnings.

Cazenove analyst Kenneth Ma has an eye on trendy fashion retailer I.T Limited , which recently listed and currently derives most of its revenue from Hong Kong shoppers.

Ma sees I.T's recurring earnings up 33 percent this year and has a target price of HK$2.50 on the shares, 18 percent above their Wednesday close.

Disney wait slows retail sales growth
Grace Lam, Hong Kong Standard
May 4, 2005

http://www.thestandard.com.hk/stdn/std/Business/images/shop0504.jpg
Retailers say sales growth this year will be fueled largely by the rebound in Hong Kong consumer demand. AP

SAR retailers said sales growth slowed during the first three days of the Labor Day Golden Week, as some mainland tourists have delayed their travel plans until the opening of the Disneyland theme park in September.

Although the government said Tuesday that visitors from the mainland increased 7.7 percent from a year ago to 175,791 in the first three days of the holidays, retailers said the impact is abating and much of this year's growth is expected to be driven by a rebound in Hong Kong consumer demand.

Jewelry retailer Chow Sang Sang said sales during the first two days of Golden Week were near last year's level. It expects 5 percent year-on-year sales growth during the entire period.

Corporate manager Sallus Wong said the company believes the slowed growth is partly because many mainland tourists, who planned to travel to the territory under the individual visit scheme, will defer their trips to after September.

"Growth should be fueled by a rebound in local consumer sentiment this time, while the approaching Mother's Day also helps," she said.

Wong said strong growth during the Labor Day holidays last year was mainly due to the low base for comparison in 2003, when the territory was battered by the SARS outbreak, so slower growth is expected this year.

Fashion retailer Moiselle International said some mainlanders went to other destinations in Southeast Asia for the holidays instead of Hong Kong, affecting sales growth.

Still, sales on the first day of the Golden Week holiday met its target and double-digit year-on-year growth is expected for the entire period.

Aeon Stores (Hong Kong), which runs the Jusco chain of department stores, said sales grew by a single-digit figure from a year ago. Managing director James Ishii said although the number of mainland visitors is expected to be lower during the holiday, the company will still see sales growth this year with the revival of Hong Kong consumer demand. Cosmetic retailers such as Sa Sa Cosmetics and Bonjour Cosmetics, on the other hand, said they are looking at 10 to 20 percent growth this year. grace.lam@singtaonewscorp.com

Hong Kong retailers make annual Swiss pilgrimage to keep abreast
4 May 2005
South China Morning Post

ATTRACTING MORE than 2,200 exhibitors and 85,000 visitors, the annual BaselWorld watch and jewellery fair is one of the premiere events for the international watch industry.

With the popularity of Swiss watches in Hong Kong showing no signs of abating, the fair is a permanent fixture on local retailers' calendars.

"The show is the best way for us to get up to date on the latest developments in watchmaking," said Simon Tam, a branch manager for Emperor Watch and Jewellery, who has been making an annual pilgrimage to Basel for more than a decade.

Francis Yip, head of the King Fook jewellery chain's watch department, has been going to Basel in April every year since 1988 - including 2003, the year most Kong Kong representatives were controversially "barred" because of the Sars outbreak.

"If we order at Basel, then we can get priority on the less-available products," he said.

Noel Wong, marketing manager at Elegant Watch and Jewellery, said this year's collections showed how far the market for mechanical watches had progressed in recent years.

"A lot of brands have put a lot of effort into producing new complications," Mr Wong said. "You can see that in the number of tourbillons on the market - they really have taken off in the last two years."

Ulysse Nardin's Royal Blue Tourbillon was one of the show's top innovations, he said. The tourbillon's bridges and plates are made of blue sapphire crystal, giving the impression that it is floating on air.

"This year was really exciting," King Fook's Mr Yip said. "A lot of brands were launching a lot of new products and innovations."

He said the biggest surprises had been Patek Philippe and Rolex, as they had released more models than in previous years.

Mr Wong said these developments would go down well with Hong Kong watch buyers. "A lot of our business is with collectors of mechanical watches. These people appreciate it when people know the things that they know. For them, it's not about the brand; they prefer something low key but which is better quality."

He said Breguet's Classique 7027 was a fine example. The brand had taken a classic pocket watch, given it an improved movement and transformed it into a wristwatch.

Mr Tam said the newly emerged spending power of mainland consumers had an effect on this year's collections.

"There has been a big change," he said. "Everybody seemed to be geared towards the Chinese market this year. They are a lot easier to cater for - they have money but they are not very demanding."

The mainland market was the reason for this year's trend for rose gold, he said.

With many mainlanders coming to Hong Kong to shop for jewellery and brand name watches, they are an important consumer group for local retailers.

"They go for the popular brands," Mr Wong said. "They stick to brands that have big marketing campaigns on the mainland."

Mr Yip said mainland tourists were getting savvy in their shopping patterns and had a keen eye for a bargain. "They are normally looking for a specific brand and model," he said. "They know what it costs at home and how much they are going to save."

On average, Hong Kong prices were about 20 per cent lower, he said, and tourists tended to buy watches in the $10,000 to $20,000 price range.

Hong Kong Retail Sales Probably Rose 9% in March on Tourism

May 5 (Bloomberg) -- Hong Kong's retail sales probably rose for a 21st month in March as tourists thronged stores and falling unemployment made consumers more willing to spend.

Sales probably gained 9 percent from a year earlier after climbing 9.6 percent in the first two months, according to the median forecast of seven economists polled by Bloomberg News. Economists combine January and February figures to eliminate distortions caused by the Lunar New Year holiday. The figures are due to be released Friday at 4:15 p.m. in Hong Kong.

Increasing retail sales have helped underpin an expansion in Hong Kong's economy, which grew at the fastest pace in four years in 2004. Standard & Poor's yesterday raised its outlook for Hong Kong's long-term foreign currency debt rating, saying soaring mainland arrivals are "revolutionizing'' the retail industry.

"Retail consumption will still be one of the key driving forces in 2005, supported by booming tourism and rising wage trends,'' said Daniel Chan, a senior economist at DBS Bank (H.K.) Ltd. in Hong Kong.

Unemployment in the city of 6.8 million held at 6.1 percent in March, the lowest in more than three years. Greater demand for workers may begin to push up salaries, boosting the spending power of Hong Kong's 3.35 million employed people.

Outlook Raised

S&P raised the outlook on Hong Kong's A+ rating to positive from stable, indicating it's more likely to raise the rating. The rating is the fifth-best investment grade and three levels above China's rating, which also has a positive outlook.

An upgrade would bring Hong Kong on par with the AA- rating held by Japan, Asia's largest economy, and would be the highest ever for the city, which was first rated by S&P in 1990.

Hong Kong will receive about 460,000 mainland tourists during a weeklong holiday this week, the Tourism Commission forecast April 26. More than half of those visitors will come under the Individual Visitor Scheme, which began in July 2003 and allows Chinese citizens to visit Hong Kong without joining tour groups, the agency said.

The visitor inflow has boosted sales and profits at companies such as Sa Sa International Holdings Ltd., a Hong Kong cosmetics chain. Visitors from China now account for about 42 percent of Sa Sa's sales, almost double the 2002 level. Other tourists make up 5 percent, and Hong Kong customers account for the remainder, according to company estimates.

By volume, retail sales probably grew 8 percent from a year earlier in March, the Bloomberg survey showed.

The following table shows economists' forecasts for the changes in retail sales from a year earlier by value and volume. All estimates are percentages.

-------------------------------------------
Value Volume
-------------------------------------------
Median 9.0 8.0
Average 9.4 8.4
High 11.6 10.7
Low 7.5 6.0
Forecasts 7 7
-------------------------------------------
Bank of East Asia 10.0 9.0
Hang Seng Bank 8.7 8.0
DBS Bank (HK) 7.5 6.0
Standard Chartered 8.5 7.8
Citigroup 10.7 9.4
Capital Economics 11.6 10.7
UBS 9.0 7.8
-------------------------------------------

Hong Kong's Retail Sales Slow in March
Friday May 6, 8:05 am ET

HONG KONG (AP) -- Hong Kong's retail sales slowed down in March due to slower economic growth following a strong recovery in 2004, figures released Friday showed.

The value of retail sales expanded 6.4 percent on year in March, following a 9.5 percent growth in the first two months of this year, according to statistics released by the Census and Statistics Department.

"Retail sales growth is stabilizing after more than one year of consecutive gains, reflecting the slowdown of overall economic growth following the strong recovery in 2004," said Vincent Kwan, economist at Hang Seng Bank.

Economists expect the growth rate to stay at its current level in the first half of the year because of an improving job market, but it may slow further in the second half if local interest rates continue to climb.

Retail sales growth in March remained broad-based, the government said, with gains particularly evident in the sales of commodities in department stores, electrical goods and photographic equipment, which all posted double-digit gains.

Growth in sales of clothing, furniture and fixtures and other consumer goods were also in the high single-digit in March.

Economists expect retail sales growth to continue amid the improving job market and rising household income.

Tourism growth is also expected to help sustain the uptrend of retail sales.

But analysts said a slowdown in the spending by mainland Chinese tourists will mean a slower growth prospect for Hong Kong's retail sales in the long run. They are also concerned about the negative impact of rising interest rates on local consumption.

SHKP buys Japan-based Seiyu Shatin for $65m
Eli Lau, Hong Kong Standard
June 2, 2005

Sun Hung Kai Properties, Hong Kong's largest property developer by market value, has paid HK$65 million to acquire a Japanese-based department store - an anchor tenant at its most visited shopping mall - for long-term investment.

Sun Hung Kai Properties said Wednesday it has acquired all interests in Seiyu (Shatin) Co, which has operated the 150,000-square-foot Seiyu department store in Sha Tin New Town Plaza since 1990.

The developer declined to disclose the price, but Yanagi Asae, a spokeswoman for Tokyo-listed Seiyu in Japan, said it sold all stakes in its Hong Kong subsidiary to Sun Hung Kai Properties for HK$65 million as the group hopes to focus on the retail business in its home country.

"After some close analysis, we decided that local management would be better for Seiyu Shatin's further development," Yanagi said.

She said Seiyu Shatin generated HK$351 million of sales revenue for the 12 months ended November 30.

Sun Hung Kai Properties announced the deal after a half-year of negotiations with Seiyu on the renewal of tenancy.

The Sha Tin shopping mall, which is undergoing a HK$300 million upgrade, attracts almost 100 million annual visits. The mall renovations have led to tenant relocations.

Seiyu Shatin earlier said the sharp rise in retail rents, which increased 25 percent last year and 15 percent in the first quarter, has been the toughest challenge to its Hong Kong operation.

In April, global music and video retailer HMV closed its branch in Sha Tin New Town Plaza to look for another location after failing to reach agreement on a new lease with Sun Hung Kai Properties. The landlord proposed other space in the same mall but HMV rejected to move in since the new location was unlikely to attract the same shopping flow.

Maureen Fung, deputy general manager of Sun Hung Kai Agency, said Sun Hung Kai Properties had been considering acquiring the department store operator since last year.

"[Seiyu] has won quite a lot of loyal customers over the years," Fung said. "So we decided to purchase Seiyu Shatin when we learned that Seiyu Group had expressed interest in selling its Hong Kong department store operations."

Fung said the transaction will not affect the department store's existing operations and its sales strategy will remain unchanged.

Sun Hung Kai Properties said Seiyu Shatin is profitable and it will be a long-term investment for the company.

Shares of SHKP rose 1.01 percent Wednesday to close at HK$75.

June 3, 2005
Government Press Release
Retailers told to bolster anti-fake efforts

Retailers have been urged to take a stronger role in safeguarding Hong Kong's reputation as a shopping haven.

Director of Intellectual Property Stephen Selby and Assistant Commissioner of Customs & Excise William Chow joined retailers at a forum today, discussing consumer confidence and intellectual property protection.

Praising their work so far, Mr Selby said to keep Hong Kong's top shopping image, it is important to reinforce further the importance of intellectual property protection to frontline ambassadors - the retailers.

"[And] it is clear participants of today's seminar are willing to find ways to win consumers' confidence and to safeguard our reputation for world-class shopping bliss," Mr Selby said.

Mr Chow added that consumers and tourists have strengthened confidence in Hong Kong's shopping scene thanks to Customs' concerted efforts in combating counterfeiting.

More than 620 companies with more than 4,100 retail outlets have joined the "No Fakes" Pledge Scheme since its launch in 1998.

Hong Kong to Report April Retail Sales
Monday June 6, 5:06 am ET
Economists Expect Pick Up in Hong Kong's Retail Sales in April

HONG KONG (AP) -- Hong Kong economists expect April retail sales figures, due out Tuesday, to show renewed growth as domestic demand remained resilient despite higher lending costs from local banks.

Retail sales growth in April would likely expand by 6 percent compared to the same period last year, according to a Dow Jones Newswire poll of seven economists. The figure compares with a rise of 5.4 percent in March.

However, retail sales have already fallen off their peak. They increased 9.1 percent in real terms for all of 2004 and 8.8 percent in the first two months of 2005.

Economists expect retail sales growth to moderate over the coming year as past and future interest rate increases impact on consumer demand.

Nonetheless, most economists don't foresee a sharp falloff in consumption, as a number of positive factors -- such as a fall in the unemployment rate to its lowest level in more than three years -- are supporting consumer spending.

"In addition to loose monetary conditions, retail sales are being underpinned by a healthy influx of overseas visitors, half of which come from the mainland (China)," Lehman Brothers' analysts said. "Also, a rise in property prices, coupled with an improving labor market, have helped to lift consumer confidence."

A boost to tourism could come from the September opening of the Hong Kong Disneyland amusement park, analysts said, which would also increase confidence in the domestic economy.

"We expect retail sales to pick up again, as Disneyland and other tourism projects usher in the next tourism wave," said Goldman Sachs in a research note. "We also believe consumption will continue to firm up, on the back of income and wage growth. We believe this will help mitigate the negative impact of rising interest rates."

Shopping fest aims to bring in $14b tourism bonanza
Winnie Chong, Hong Kong Standard
June 17, 2005

The territory will again be on tourist maps this summer when the Hong Kong Tourism Board launches a shopping fest in a bid to generate HK$14.2 billion in income for tourism-related sectors.

The board hopes the 2005 Hong Kong Shopping Festival, which begins this weekend and lasts until the end of August, will attract 4.6 million visitors to the SAR, more than half of whom are expected to come from the mainland.

A similar festival last year drew 4.4 million visitors.

More than 6,500 shops and restaurants are taking part, 55 percent of which have promised to stay open until 10pm or later to give visitors' late-night shopping and dining experiences.

From June 25 to August 31, local residents as well as overseas visitors will be entitled to one lucky draw ticket for every HK$300 spent. There are more than 70 prizes in the draw, valued at HK$2.2 million, including a lady's Rolex watch worth HK$500,000.

Other top prizes include business- class air tickets, diamond necklaces and electronic appliances.

HKTB executive director Clara Chong said that, going on past experiences, more than 80 percent of the visitors are expected to recommend the festival to friends and relatives when they return home.

She said a survey showed 85 percent of locals agreed that last year's festival was effective in promoting tourism.

A special feature this year will be an emphasis on young women, who will be told that Hong Kong is not only a shopper's paradise but also a place where high quality beauty services are available. The HKTB started promoting the festival April.

"In the past, most of the summer shopping was done by people from neighboring countries," said Chong.

"But last year we noted that travel agents in places like Australia were trying to boost the summer trade with special shopping packages for Hong Kong.

"There were also groups of visitors from the United Kingdom, Germany, the United States and Canada."

The lucky draw will be held September 5, with the winners drawn by computer.

Chong said the board received 44 complaints about last year's draw, most focused on the fact that many of the winning numbers came from the same batch of tickets.

Shopping time again! :colgate:


...
A special feature this year will be an emphasis on young women, who will be told that Hong Kong is not only a shopper's paradise but also a place where high quality beauty services are available....
...


hmm... facial and spa services? Isn't it a bit expensive to fly over to do that? Unless, it works miracles :)

Wednesday June 29, 4:20 PM
Hong Kong's A.S. Watson buys Dutch Portegies Drugstore chain

AP - A.S. Watson, the retailer owned by Hong Kong conglomerate Hutchison Whampoa Ltd., said Wednesday it bought the Dutch chain Portegies Drugstore in its third European foray this year.

The company declined to disclose what it paid for the 140-year-old Dutch drugstore chain, but said Portegies stores will be re-branded under one of A.S. Watson & Co. Ltd.'s operating brands starting Aug. 16.

Portegies has 38 outlets with 280 employees in the Netherlands. A.S. Watson said in a statement it plans to open as many as 100 stores there in 2005.

"The acquisition of Portegies is part of the group's expansion strategy for Europe," A.S. Watson said.

The purchase is A.S. Watson's third move for a European chain this year. In January, it bought French perfume chain Marionnaud Parfumeries SA. Last month, it made a 211.9 million pound (US$384.5 million; €319.7million) offer for listed U.K. perfume chain Merchant Retail Group PLC. The status of the purchase wasn't immediately clear.

Watson has been adding to its European health-and-beauty portfolio during the past few years. Last year, it bought Drogas, a chain operating in Latvia and Lithuania. In 2002 it paid US$1.6 billion for the Kruidvat Group, which runs stores in the Netherlands and Belgium.

The Hong Kong-based unit of Hutchison Whampoa _ controlled by Li Ka-shing, one of Asia's richest men _ also operates the Savers and Superdrug chains in the U.K.

Watson operates 16 retail brands, with 6,500 stores, including health and beauty chains and perfumeries. It also produces beverages, such as bottled water and fruit juices. It employs 87,000 people worldwide and in its statement said it is the world's largest health and beauty retailer.

Analysts said the Portegies purchase could mean that parent company Hutchison is suffering fewer losses from its operations in 3G or third-generation mobile phone technology.

"This is the latest in Hutchison's aggressive ambitions in expanding its European retail chain," said Merrill Lynch analyst Cusson Leung.

"It's a signal that Hutchison's 3G outflow is narrowing, and it's redeploying funds into core operations like retail," he said.

Hutchison, which has invested 18.2 billion euros (US$21.9 billion) in the 3G venture, in March posted a 2004 loss before interest and taxes on Hutchison's 3 Group, the brand under which its 3G businesses operate.

Bossini's mainland push is yuan hedge
Grace Lam, Hong Kong Standard
July 6, 2005

Casualwear retailer Bossini International expects the mainland to replace Hong Kong as its biggest market within five years.

Executive director Kathy Chan said expansion of its retail network in China would be a hedge against increased production costs at its mainland plants in the event of a yuan appreciation.

A 10 percent appreciation of the yuan would narrow the gross profit margin by some 3.5 percent, she said.

The mainland is currently Bossini's second-largest market, accounting for 22 percent of its sales last fiscal year. Hong Kong accounted for 52 percent.

The retailer, which had 274 wholly owned and 203 franchise outlets on the mainland at the end of March, plans to add more than 150 stores there this fiscal year. More than half would be franchised.

On Tuesday, Bossini reported a 54 percent profit increase for the year ended in March.

Net profit grew to HK$182 million from HK$118 million a year earlier. Turnover jumped 13 percent to HK$2.02 billion. It proposed a final dividend of 3.9 HK cents per share.

The company, with 827 outlets in 20 countries, saw retail sales in its core markets - Hong Kong, the mainland, Taiwan and Singapore - grow to HK$1.67 billion, up 13 percent from a year earlier. Same-store sales growth was 11 percent.

Its operating profit on the mainland jumped 106 percent to HK$33 million following a network restructuring. Operating profits in Taiwan and Singapore grew 6 percent to HK$18 million and 35 percent to HK$23 million, respectively.

Operating profit at Bossini's 32 outlets in Hong Kong jumped 43 percent to HK$97 million as turnover grew 18 percent to HK$803 million.

The company will spend HK$50 million this year to add stores and renovate others.

It plans to add three to five stores in Hong Kong and more than 20 directly managed or franchised outlets in Taiwan, in addition to opening its first store in Malaysia.

Hong Kong Retail Sales Up on Job Growth
Thursday July 7, 8:38 am ET

Hong Kong Retail Sales Up 7.2 Percent in May on Job Growth, Strong Economy

HONG KONG (AP) -- An expanding economy and strong job growth helped boost Hong Kong retail sales by 7.2 percent in May, and economists said the upward trend will likely continue as the city benefits from a tourism boom and rising consumer confidence.

The value of retail sales in May rose 7.2 percent from a year earlier to 17.7 billion Hong Kong dollars (US$2.3 billion; euro1.9 billion), Hong Kong's Census and Statistics Department said Thursday.

In April, the value of retail sales rose 8.6 percent.

"Across-the-board increases (in sales) were recorded in nearly all major types of outlets," the government said in a statement.

Tourists from mainland China, who flocked to Hong Kong during a weeklong holiday in early May, helped lift sales for the month, economists said.

The continued improvement in the labor market is expected to help keep retail sales growth on track.

"Widespread reports of salary gains in recent months and a cumulative expansion of total employment of about 150,000 over the past two years bode well for a sustained uptrend of retail sales," said Hang Seng Bank economist Vincent Kwan.

Sportswear chain expands as new fashion trend rises
Grace Lam, Hong Kong Standard
July 11, 2005

Swire Resources, which owns Hong Kong's largest sportswear retail chain Marathon, said it plans to further expand its presence in the city by opening more stores this year.

The firm, which owns 90 sportswear stores under brand names of Marathon, Gigasports, Catalog, Columbia and Rockport, will spend millions of dollars to add at least five to six outlets in Hong Kong in the second half of 2005.

Swire Resources director Janis Tam said that sports apparel has become a fashion trend in Hong Kong and there is huge growth potential in the sportswear retail market.

"The cake has become bigger. More and more people treat sportswear as a kind of casual wear. It has already become part of our lifestyle to put on sports shirts during weekends," Tam said.

The economic rebound and the flood of mainland tourists to the SAR helped the company achieve double-digit growth each year for the past two years.

Catalog, a chain of 15 sportswear stores launched by Swire in 2001 that targets the young and trendy, saw particularly strong growth. Marathon, a sports lifestyle chain which focuses on the mass market, and Gigasports, which sells branded footwear, apparel and sports equipment, also recorded good growth.

To capture a bigger slice of the youth market, the firm is also spending more on image to make it look younger, as well as expanding its sales network. The company has spent more than HK$100,000 in recent months to employ and train a team of salespersons aged in their early 20s at Gigasports to be product specialists. They will receive professional training on selected sporting activities like basketball, soccer and swimming.

"By employing young specialists, we're looking to provide customers with professional advice on different sports, thus giving a more energetic brand image and drawing more young customers," Tam said.

Gigasports, whose major group of customers are sports players aged between 10 and 40, saw sales grow more than 10 percent to over HK$100 million last year. The company is planning more such stores in the future, she said.

Swire Resources, which opened five sportswear retail outlets in the first half, is planning another five to six outlets in the second half, she said.

"As the economy picks up, we have always hoped to open more stores in the city, though we must admit that surging rentals have increasingly become a concern," Tam said, adding that some landlords are doubling rents when the company seeks to renew tenancy agreements.

She said the firm will consider relocating some stores if rents became too expensive. In the future, it will look at opening stores in both prime locations and satellite towns.

"Many young couples with high consumption power now choose to live in satellite towns. We will review our network coverage and may put more stores there in the coming days," Tam said.

Meanwhile, the company, which holds distribution rights to Puma and Columbia products on the mainland and operates over 40 wholly owned outlets plus hundreds of sales points via regional dealers in the country, is also planning expansion in cities like Beijing and Guangzhou.

Swire Resources has 30 percent of sales coming from China. Driven by strong demand in China, Swire Resources doubled sales to more than HK$1 billion last year.

Solid sales drive retail rents
Ernest Kong
11 July 2005
South China Morning Post

Sun Hung Kai Properties claims it is seeing strong growth in shopping mall activity and is benefiting from the upturn through turnover-based rents.

Shops in the recently launched APM mall in Kwun Tong reported combined sales of $168 million in May, Sun Hung Kai Real Estate Agency general leasing manager Maureen Fung Sau-yim said. The mall was opened in April.

"We are charging tenants a turnover rent that [in May] was double the base rent," Ms Fung said, adding that the base rent varies from $80 to $200 per square foot.

She said fashion retailers saw a 40 to 60 per cent surge in sales in May while tenants of food and beverage business reported 15 to 20 per cent increase in sales.

Another of the developer's fast growing malls is the 400,000 sq ft East Point mall in Hang Hau, Tseung Kwan O, which has seen passenger flow double in the first six months of this year compared with the same period last year, according to the agency's deputy leasing manager Fiona Chung Sau-lin.

"Our sales [rental income for East Point] have increased 18 per cent in the period," said Ms Chung. The mall's base rent is $100 to $150 per square foot, she said.

U-Right plans to buy more shops
Andy Cheng
23 July 2005
South China Morning Post

Casual wear retailer and manufacturer U-Right International Holdings plans to buy seven shops in non-prime locations in Hong Kong this year to mitigate the impact of soaring rents, according to chairman Leung Ngok.

Announcing the company's annual results for the year to March yesterday, Mr Leung said $300 million had been earmarked from U-Right's $700 million cash on hand to buy seven new shops and rent a further four in Hong Kong this year.

"We closed six shops last year because of the huge rise in rents. One of them was our Tsim Sha Tsui shop whose rent went up 200 per cent. We can't afford that," he said. The new shops would be in various districts but not in high rent areas. U-Right has 19 shops in Hong Kong, two of which it owns.

Mr Leung said rent increases last year ranged from 20 per cent to 200 per cent which were "not in proportion with increase in sales."

Capital expenditure this year would amount to $500 million, Mr Leung added.

U-Right has earmarked $100 million to open 90 shops in the mainland to take the number to 420 by the end of the year. It will also invest $100 million to expand its five Shanxi factories and to open another factory in Shunde.

The company posted net profit of $95.98 million for last year, a drop of 15.7 per cent from $113.87 million in 2003. Turnover reached $913.84 million, up 23.5 per cent from $739.67 in the previous year. Earnings per share were 5.85 cents.

The company declared a final dividend of 0.8 cent per share, compared with 1.5 cents in 2003.

Luk Fook to open fewer new stores due to soaring rents
Grace Lam, Hong Kong Standard
July 23, 2005

Luk Fook Holdings (International), the second-largest Hong Kong-listed jewelry retailer by market value, said it will slow its pace of expansion in the SAR this year due to rising shop rents.

The retailer's net profit in the past fiscal year rose 64 percent to a record HK$126 million. It will spend HK$20 million to open about three stores in the SAR this fiscal year, down from five new outlets last year.

Director and financial controller Paul Law said retail rents have already risen to "an unreasonably high level."

"Landlords are getting a bit crazy. This is not rational at all," Law said.

Boosted by the influx of mainland tourists and the opening of the Disneyland theme park in September, retail rents have risen 24 percent since the start of the year and are expected to rise a further 20 percent year-on-year in the next 12 months, according to property consultants Colliers International.

Luk Fook, which has 26 stores in the SAR, said landlords had raised rents 20 to 100 percent when the company renewed some leases last year.

The company will have to renew the tenancy agreements of four or five stores in the next 12 months. It may consider opening more stores in the New Territories, where rents are cheaper, rather than prime locations.

Luk Fook's net profit grew 63.7 percent to HK$125.99 million for the year ended March, as sales jumped 22.8 percent to HK$1.96 billion.

The company proposes a final dividend of 6 cents and a special dividend of 2 cents a share.

Hong Kong fashion icon will expand in China
By Joshua Fellman
Bloomberg News
THURSDAY, AUGUST 4, 2005

HONG KONG Joyce Boutique, which sells clothing by designer labels including Balenciaga and Jil Sander in Hong Kong and Taiwan, plans to open its first shops in China in 2007, the company's managing director, Adrienne Ma, said.

The company, which sells clothing through franchisees in China, is determining how much money is needed to open shops in Shanghai and Beijing, Ma said Tuesday.

Joyce also may open a store in Macao, she said.

China's economic expansion, which has averaged 9.5 percent per year since 1978, has led to rising personal wealth among Chinese who have become more willing to splurge on luxury goods.

Retail sales in China surged 12.9 percent in June, a 19th consecutive month of growth in excess of 10 percent.

"Greater China is definitely our focus, our direction, our strategy," Ma said in an interview.

"Our experience with Southeast Asian markets is that culturally they're quite different from Greater China. Operating in those markets may be more difficult."

Joyce in 1997 shut its 14-month-old Bangkok store and pulled out of South Korea after the Asian financial crisis caused consumer spending to plunge. The company's stock has surged 78 percent this year as economic expansion and declining unemployment helped Hong Kong retail sales grow for 22 consecutive months.

The rewards in China are probably greater, according to Renee Hung, a fund manager at Value Partners in Hong Kong. The Chinese government has said it plans more measures to spur consumer spending as Giorgio Armani, Prada Holding, Cartier and other luxury brands expand in there.

Armani reported in May that its sales in China surged 52 percent in the first quarter, outpacing an overall 16 percent gain.

"The demand for high-end is definitely there," said Hung. "The Hong Kong market is so small, retailers really have to go into China."

For luxury merchandise, Joyce and other high-end retailers will need space in the most fashionable malls, where rents have been rising, Hung said. It will take two years to three years for retailers to build up their local reputations, she said.

It could take a while for China to contribute to Joyce's earnings. Profit at Joyce more than doubled to 61.2 million Hong Kong dollars, or $7.9 million, in the year that ended March 31 as sales surged 16 percent to 633.1 million dollars.

"Success really depends on variables, on execution," Hung said in a phone interview.

"Do they have the local knowledge to pull it off? Some luxury brands have gone in just to plant the flag, but Joyce wants to be profitable."

Among rival Hong Kong luxury retailers, only I.T has entered China, Hung said. I.T features goods from designers like Alexander McQueen, Anna Sui and Comme des Garçons.

China opened its retail market to overseas investment this year, scrapping a requirement for local partners. Hong Kong is deemed a foreign country under China's customs and investment rules.

Hong Kong has benefited as more Chinese tourists have been shopping in Hong Kong after China eased travel rules to the city in mid-2003. Many Chinese prefer to buy in Hong Kong because they know they are not being sold counterfeits, some shopkeepers say.

Shopping in Hong Kong also is cheaper, according to Ma at Joyce. China imposes an import tax on foreign-made goods and a 17 percent value-added tax. Hong Kong is a free port with no sales tax, and prices are 10 percent to 20 percent lower, Ma said.

"We've always been more sort of local shopping oriented, but some brands have seen quite impressive gains from mainland tourists," Ma said. She declined to give a breakdown of spending by visitors from China.

Ma said Joyce would probably open an outlet in a shopping center in Macao, the only place in China where casino gambling is legal.

Visitors to the former Portuguese colony rose two-fifths in 2004 to 17 million, with more than half coming from China, drawn by new casinos including the $240 million Sands Macao.

Sincere sees turnaround for department store unit
Grace Lam, Hong Kong Standard
August 6, 2005

Sincere Company, a Hong Kong-listed department store operator, said Hong Kong sales rose 20 percent in the first five months and it expects the retail unit to return to profit this year.

Speaking after the firm's annual general meeting Friday, Sincere's group managing director Philip Ma said he is confident to turn around the unprofitable department store unit and achieve a slight gain for the year. ``Despite growth in the retail market slowing in the first half, we're optimistic that the surging stock and property markets will encourage buying sentiment and boost spending in the second half of the year,'' Ma said.

Sincere, which was set up in Hong Kong in 1900 and now runs three department stores in the city, narrowed losses from the unit to HK$30.25 million for the fiscal year ended February from HK$56 million a year earlier.

Ma said benefits from the influx of mainland tourists were limited as they accounted for less than 10 percent of sales.

Sincere, which also operates restaurant, property rental, property development, securities trading and advertising businesses, has been in the red for seven straight years since 1999.

For the fiscal year ended February, net loss narrowed to HK$118.71 million from HK$169.69 million a year earlier, affected by a bad debts write-off for property investments.

Rival Lifestyle International, which runs the Sogo department store, saw net profit rise some 60.7 percent to HK$441.3 million in 2004.

Sincere will study a proposal to open a fourth department store in Hong Kong in mid-2006. Estimated investment for the 20,000- to 30,000-square-foot store is HK$20-30 million.

Meanwhile, it has signed an agreement with global travel franchise organization Uniglobe to jointly develop travel business in Eastern China, Hong Kong and Macau.

Ma said Sincere will act as a franchisee of Uniglobe to provide independently owned and operated travel agencies with support and service. It is expected the mainland operation will become profitable in three years.

At present the company has about HK$130 million cash on hand.

Economists predict steady growth for Hong Kong retail sales because of tourism, employment
6 August 2005

HONG KONG (AP) - Hong Kong's retail sales likely stayed on a steady growth path in June as the tourism industry remained vibrant and the number of people employed rose, economists say.

The value of the city's retail sales -- to be announced Monday -- is estimated to have expanded 7 percent in June from the same month last year, according to the median forecast of economists surveyed by Dow Jones Newswires.

Hong Kong's retail sales grew 7.2 percent by value in May.

Adjusted for price changes, retail sales are expected to have increased 6.4 percent by volume in June, the same rate as in May.

"The local economy remains strong and the job market is improving, supporting continued retail sales growth," said Prakash Sakpal, an analyst at ING.

The city's total employment grew to a record 3.36 million for the three months ended June. The jobless rate stood at 5.7 percent for the April-June period, the lowest rate since August-October 2001 when it was 5.5 percent.

Robust economic growth in China also continues to support Hong Kong's tourism industry and overall economy, Sakpal said.

More than half the visitors to Hong Kong now come from China and tend to spend a lot of their travel budget on shopping.

Economists see few factors at present that could derail retail sales' steady expansion in coming months.

The opening of Hong Kong Disneyland in September may give the retail sector an additional boost, Sakpal said.

Malls think small for bigger profit
Anchor tenants are out, trendy boutiques are in as retail landlords divide up space to maximise rent
Sandy Li
10 August 2005
South China Morning Post

The look of Hong Kong shopping malls is changing slowly but surely as familiar megastore brand names close shop and fashionable newcomers arrive to fill the vacated space.

The fast-changing tastes of Hong Kong shoppers and unprecedented competition in the mall industry are prompting retail landlords to restructure their tenant mix. Stylish boutiques are beginning to replace the anchor tenants that occupy large leasing spaces. The development is aimed at enhancing revenue from rents.

"The world of Hong Kong malls is definitely entering a makeover era," said Bonnie Gokson, a retail and image consultant for luxury retailers. She believed that mall developers should invest in an A-team of experts who understood international trends and the local market mindset so they could come up with a "magic mix" of business that worked for their location.

Last week, landlords of two department stores in Causeway Bay - one of the most expensive districts in town for retailers - decided not to renew their tenants' leases when their contracts expire next year.

Last Wednesday, Chinese Estates Holdings said it would be dividing up the 66,000sqft space on the ground floor and basement of Windsor House into small retail outlets, a move that would triple its rental income.

Seibu, which has occupied 30,000sqft of the ground floor of Windsor House since 1997, will move out in July next year.

And on Thursday, Mitsukoshi suffered a similar setback at Hennessy Centre, where it has been a tenant for the past 23 years. The landlord, Hysan Development, has decided not to renew the lease when the Japanese department store's contract expires in September next year. Hysan plans a complete overhaul of the four-level shopping centre.

These market developments echo what happened last year when British retailer Marks & Spencer was forced to close its 24,000sq ft store at Pacific Place, even though it was willing to pay a higher rent. About 12,000sqft has been leased to Spanish fashion retailer Zara for its second Hong Kong outlet. The remaining 12,000 sq ft will be leased to other brands.

Alva To Yu-hung, research director at DTZ Debenham Tie Leung, said department stores of an older generation could be expected to lose favour among a young set of shoppers who were seeking the latest and most talked-about trends in fashion and consumer products.

Replacing the conventional department stores with various smaller multi-brand units not only raised the level of rental income but also helped to reinvent the malls with an "exciting and trendy" image, Mr To said.

Meanwhile, the latest figures tracking consumer behaviour note only a slight pickup in the number of shoppers visiting department stores. Nielsen Media Index (which tracks Hong Kong media and retail consumer patterns) recorded only 2 per cent growth in the number of visitors at department stores, from 76 per cent in 2003 to 78 last year. But visitor numbers at shopping malls grew from 68 per cent in 2003 to 79 per cent in the same period.

Adrian Ngan Wai-hung, regional property analyst at BNP Peregrine Paribas, said having anchor tenants was less important when a growing number of retailers at home and from overseas were clamouring for shop space.

"These days it is more important to have an innovative retail concept than an anchor tenant," he said. "Department stores are a low-margin business. They will be forced to move out as rents go up," he said.

An industry watcher said retail rents had risen by as much as 200 per cent in certain locations. Tenants at Sogo, for example, which operates in a format of multiple small counters, paid more than $4,000 per sq ft a month on rent.

Anchor tenants, who usually occupied 30,000 sq ft or more, tended to enjoy favourable terms such as rents at about $100 persqft even at prime locations, the industry watcher said, which "explains why landlords are ready to sacrifice mega anchor tenants, especially the outdated department stores".

However, Simon Lo Wing-fai, research head at Colliers International, maintained that anchor tenants were still a drawcard for a big mall.

He said Land Crawford at Pacific Place was performing quite well. He believed the trend towards dividing up retail space for smaller shops in order to generate a higher overall rental income would offer only short-term benefits.

"The question is whether the mall can sustain its popularity levels. Landlords have to keep doubling their effort to maintain a good trade mix. And they have the extra burden of managing a number of small shops," he said.

Among mall landlords, Hongkong Land has demonstrated its faith in the anchor tenant system by introducing internationally famous department store Harvey Nichols to The Landmark, in Central.

Hong Kong Retail Sales Up 7 Percent
Tuesday September 6, 6:20 am ET

HONG KONG (AP) -- Retail sales in Hong Kong grew 7 percent in July from a year ago to 17.4 billion Hong Kong dollars (US$2.24 billion; euro1.80 billion) amid a positive outlook for jobs and tourism, the government said Tuesday.

The sales volume of electrical goods and photographic equipment surged 10.3 percent and furniture and fixtures saw a 9.7 percent jump, the government said in a statement. Clothing outlets sold 8.7 percent more.

The total value of retail sales increased 7.7 percent in the first seven months of the year compared to the same period a year ago. The government didn't provide an absolute figure.

Meanwhile, the sales volume of motor vehicles and parts fell 8.6 percent. Fuel sales dropped 1.6 percent.

"The improvement in employment conditions, vibrant inbound tourism, as well as healthy development of the property market lent support to consumer spending," the government said in a statement.

It said interest rate increases and higher oil prices have had a "rather moderate" impact on spending. The government added it expects the opening of Hong Kong Disneyland next Monday to boost shopping.

Europe powers profits for Hong Kong's Esprit

HONG KONG, Sept 13 (Reuters) - Global fashion retailer Esprit Holdings Ltd. rang up a 52 percent rise in second-half net profit on Tuesday, driven by strong sales in Europe, better margins and recovering Asian operations.

Hong Kong-based Esprit, which sells mid-priced goods ranging from T-shirts to suits and bed linens, said it expected overall sales to continue growing at least 20 percent a year, driven increasingly by markets in Asia and Europe beyond Germany.

Sales growth was driven by European markets including France, Austria and Scandinavia. Those countries plus Italy and Britain and recovering Asian markets led by Hong Kong, Taiwan, Singapore and Malaysia will drive future growth, it said.

Esprit, the world's fifth-largest clothing retailer with a market value of close to $9.4 billion, posted a fiscal second-half net profit of HK$1.686 billion (US$216.1 million) for the six months to the end of June, which compared with HK$1.11 billion a year earlier, based on Reuters calculations.

For the full year, Esprit earned HK$3.338 billion, up 67 percent from the HK$2 billion it earned a year earlier, meeting the consensus expectations of 16 analysts who had forecast earnings of HK$3.3 billion, according to Reuters Estimates.

The company raised its final and special dividends, lifting its full-year total payout to HK$2.34 billion, or about 70 percent of its earnings.
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"Right now we're seeing diversification beyond Germany, which is the right direction for Esprit," said Conita Hung, a director at Delta Asia Financial Group in Hong Kong.

Esprit is a favourite of Hong Kong investors due to its earnings growth, with an average analyst rating of "outperform," according to Reuters Estimates.

OLD AND NEW MARKETS

Esprit said growth in its German and Benelux (Belgium, the Netherlands, and Luxemburg) markets was sustainable. The company, which generates nearly half its sales in Germany, also said its loss-making U.S. business was on track for a turnaround.

North America accounts for just 2 percent of Esprit sales.

"If we have fixed the U.S. in three to four years' time, it will be okay. There's huge potential there," Chief Executive Officer Heinz Krogner told reporters.

Esprit pledged capital spending in the new year of HK$900 million to open and refurbish stores, with plans for 110 new outlets, including 40 in Europe and 50 in Asia.

Overall, the full-year EBIT (earnings before interest and taxes) margin rose 2.8 percentage points to a record 20.4 percent.

Sales at Esprit stores open a year or more rose by 8.5 percent on average in the year, up from 5.3 percent.

Esprit shares closed down 0.96 percent at HK$61.85 on Tuesday, before the results were announced.

The stock has risen by 31.6 percent in 2005, outrunning global retailers such as Gap Inc. , Spain's Inditex , which operates the Zara chain, Italy's Benetton Group and Sweden's Hennes & Mauritz .

Esprit trades at around 22 times forecast earnings, compared to multiples of 15 for Gap, 21 for Inditex and 24 for H&M.

Esprit proposed a special dividend of HK$0.84 per share, compared with HK$0.50 per share a year earlier, and a final dividend of HK$0.66 per share, up from HK$0.48.

Revenue for the full year grew 26 percent to HK$20.63 billion from HK$16.4 billion, lagging an average analyst forecast of HK$21.2 billion, according to Reuters Estimates. (US$1=HK$7.8)

Hong Kong Witnesses Wave Of Retail Store Expansion

HONG KONG, Oct 3 Asia Pulse - With two world-known retailers rolling out their new stores on Friday, Hong Kong has witnessed a wave of store expansion.

One is Tsim Sha Tsui SOGO store. As a new landmark along the Avenue of Stars, the two-storey store covers a gross floor area of about 1,150 square metres, housing over 150 local and international brands.

"Compared with the store in Causeway Bay, the new store introduces more trendy and fashionable brands, which will better fit younger shoppers," Eliza Lo, deputy general manager of SOGO's owner -- Lifestyle International Holdings Ltd, said.

The other, also at Tsim Sha Tsui, is Uniqlo, Japan's leading casual apparel brand. Though it is the brand's first presence in Hong Kong, the company plans to establish 30 outlets in the territory in three to four years, said Pan Ning, Managing Directorof Uniqlo Hong Kong.

With Hong Kong as the base, Uniqlo will further explore the markets in south China and Southeast Asia, Pan added.

This wave of store expansion started in August. On Aug. 24, the five-star hotel Mandarin Oriental reopened after interior decoration and renovation. On Sept. 5, the British-style department store, Harvey Nichols, successfully embarked at Central. Three days later, another five-star hotel, Season Hotel, started operation.

According to the Jones Lang LaSalle Retailer Sentiment Survey early this year, 88 per cent of the respondents plan to expand this year. Of this group of expanding retailers, 94 per cent plan to open new stores. Eighty per cent plan to achieve a richer product offering, in particular the fashion retailers. More than half are looking at increasing the size of the existing store while ten plan to expand through acquisition.

"The wave of store expansion shows a strong consumer," said a government spokesman. "The improvement in employment conditions, vibrant inbound tourism, as well as healthy development of the property market lent support to consumer spending," he added.

According to the latest figures released by the Census and Statistics Department of Hong Kong, the unemployment rate from June to August remained at a four year low of 5.7 per cent. The launch of the Individual Visit Scheme led to 5.88 million in the first six months of 2005, well above the average of 5.02 million per year during 2000-2003.

The Immigration Department estimated that over 500,000 mainland visitors will travel through Hong Kong checkpoints duringthe National Day holidays. If each of them spends 4,000 HK dollars,they will bring 2 billion HK dollars (US$258 million) to Hong Kong.

"Riding on Hong Kong's improving economy and the opening of the Hong Kong Disneyland, we are confident about the upward trend in the local retail market. This is why we put an investment of 100 million HK dollars into this new store," said Thomas Lau, ManagingDirector of Lifestyle International Holdings Ltd.

Observers said Hong Kong's economy, which rose by a faster-than-expected 6.8 per cent in the second quarter, is moving into the second half with expectations of strong consumer and tourist spending with the opening of the Disneyland theme park, the week-long National Day holiday in the mainland, and the World Trade Organization's ministerial meeting in December.

"We can't rule out double-digit retail sales growth in the final quarter," said DBS Bank senior investment strategist Daniel Chan.

Retailers seek other options as rents bite

Soaring Hong Kong retail rents are prompting some tenants to buy stores to minimize higher costs. Apparel chain U-Right International Holdings plans to increase the proportion of stores it owns to 20 percent of its outlets in the next three years from the present 5 percent.

Prudence Ho
Hong Kong Standard
Thursday, October 27, 2005

Soaring Hong Kong retail rents are prompting some tenants to buy stores to minimize higher costs. Apparel chain U-Right International Holdings plans to increase the proportion of stores it owns to 20 percent of its outlets in the next three years from the present 5 percent.

U-Right closed three stores when the landlord sought rent increases of 50 percent to 100 percent.

"The recent rent increases are a lot higher than sales and profit growth," said chairman Leung Ngok. "We have to do something to alleviate the impact."

U-Right, which aims to add 12 outlets to the current 18 by the end of next year, plans to invest HK$150 million to buy local stores in the next three years, while also investing HK$50 million to buy shops in China.

Even so, the flight from rent-hungry landlords can come at a price, from lost flexibility on location to higher earnings volatility linked to new accounting rules.

Cosmetic chain SaSa has so far shunned store purchases.

"If a busy shopping area changes and customers are attracted to other districts, owned stores lose the flexibility to relocate," said SaSa corporate communications director Macy Leung. All the company's Hong Kong stores are rented.

Purchase costs can also be capital intensive, with stores in busy shopping areas costing sometimes tens of millions of HK dollars.

Shoe chain Mirabell deputy managing director Lawrance Ng cites a ground floor shop in Parklane Shopper's Boulevard in Tsim Sha Tsui, selling for HK$60 million to HK$70 million.

Companies now must also value owned property each year, and under new accounting rules any revaluation gains or loss are booked to the profit and loss account. Thus, earnings are affected if the valuation drops.

Clothing giant Giordano considers non-purchase options in response to higher rents.

"If the rental increases so sharply that we can't afford it, we have two methods to cope," Giordano spokesperson William Yue said. "We would cut the shops' size or relocate the stores."

Provisional Statistics of Retail Sales for September 2005
Monday, November 7, 2005
Government Press Release

The Census and Statistics Department (C&SD) released the latest figures on retail sales today (November 7).

2. The value of total retail sales in September 2005, provisionally estimated at $15.7 billion, increased by 4.9% over a year earlier. After netting out the effect of price changes over the same period, the volume of total retail sales increased by 4.1% in September 2005 over a year earlier.

3. The revised estimate of the value of total retail sales in August 2005, at $16.5 billion, increased by 6.2% over August 2004, while the volume of total retail sales increased by 5.3%.

4. Taking the first nine months of 2005 together, total retail sales increased by 7.3% in value or 6.4% in volume over the same period a year earlier.

5. Analysed by type of retail outlet and comparing September 2005 with September 2004, the volume of sales of motor vehicles and parts increased the most, by 12.4%. This was followed by sales of electrical goods and photographic equipment (+12.2% in volume); commodities in supermarkets (+5.1%); commodities in department stores (+4.8%); wearing apparel (+2.9%); furniture and fixtures (+2.6%); jewellery, watches and clocks, and valuable gifts (+2.0%); miscellaneous consumer goods (+1.8%); and food, alcoholic drinks and tobacco (+0.4%).

6. On the other hand, the volume of sales of fuels decreased by 1.7% in September 2005 compared with a year earlier, while sales of miscellaneous consumer durable goods and of footwear, allied products and other clothing accessories also decreased, both by 0.5% in volume.

7. Based on the seasonally adjusted series, the volume of total retail sales decreased by 0.8% in the third quarter of 2005 compared with the preceding quarter.

8. These retail sales statistics are primarily intended to measure the sales receipts of goods sold by local retail establishments, for gauging the short-term business performance of the local retail sector. They cover consumer spending on goods but not on services. Moreover, they include spending on goods by visitors in Hong Kong but not by Hong Kong residents outside Hong Kong. Hence they should not be regarded as a comprehensive indicator of overall consumer spending. In this context, it may be noted that the share of consumer spending on services in overall consumer spending has been increasing over time.

9. Users interested in the trend of overall consumer spending should refer to the quarterly series of private consumption expenditure (PCE), which is a major component of the Gross Domestic Product. Compiled from a wide range of data sources, PCE covers consumer spending on both goods (purchased from all channels) and services by Hong Kong residents whether domestically or abroad.

Commentary

10. A Government Secretariat spokesman pointed out that the year-on-year growth in the overall volume of retail sales slowed down slightly in September. This notwithstanding, the volume of sales at many different types of retail outlets still recorded solid increases, particularly those for consumer durables such as motor vehicles and parts, and electrical goods and photographic equipment. While consumer sentiment may have turned more cautious following the successive rise in interest rates in recent months, the still strong overall economic performance and in particular the sustained increase in employment, the rise-back in labour income and the vibrant inbound tourism are expected to continue to support retail sales in the short term.

Further information

11. The volume of retail sales is derived from the value of retail sales after adjusting for price changes. The relevant components of the Consumer Price Index are used as price deflators.

15. The report containing the analysis of the September 2005 results is now on sale at HK$8.0 per issue. Both print version and download version of the publication can be purchased online at the "Statistical Bookstore, Hong Kong" (http://www.statisticalbookstore.gov.hk). Download version of the publication can be purchased at 75% of its original price exclusively at the online Statistical Bookstore. Print version if purchased online is also offered a discount, at 85% of its original price at the Statistical Bookstore as well as the Government Bookstore (http://www.isd.gov.hk/eng/bookorder.htm).

Rents pinch Hong Kong retailers
By Philip Lagerkranser and Kelvin Wong
Bloomberg News
TUESDAY, NOVEMBER 8, 2005

HONG KONG Noel Smyth, who ran an Irish theme bar in the SoHo restaurant district of Hong Kong, anticipated a hefty rent increase when the lease at Dublin Jack's expired in October. He did not expect it to nearly double.

The landlord wanted 280,000 Hong Kong dollars, or $36,000, a month, up from 150,000 dollars. Smyth refused and closed the bar.

"A 30 percent raise would still have been a viable option," said Smyth, managing director at Delaney's International Development, which runs another three bars and restaurants in the city. "For the kind of raise they were asking, there is no way we can meet that."

Welcome to Hong Kong's latest economic recovery.

Shaking off the impact of the 2003 outbreak of severe acute respiratory syndrome, the $164 billion economy has expanded for the past eight quarters, unemployment is at a four-year low and retail sales have climbed for 26 consecutive months.

Now, say analysts, rising rents may threaten that growth.

"The surge in rents has become a serious problem, threatening Hong Kong's competitiveness," said Dong Tao, chief Asia economist at Credit Suisse First Boston.

"This will hurt the incomes of ordinary people."

Tao forecast that Hong Kong's economic growth would slow to 4.4 percent in 2006 from 5.5 percent this year. The economy grew 8.1 percent in 2004.

Retail rents in the city rose 20 percent in the third quarter from a year earlier, according to the property consultancy CB Richard Ellis.

That is fueling what Tao calls "bad" inflation - price gains caused by rising costs rather than by growing demand.

It means businesses will have less room to hire and increase salaries, he said. Hong Kong snapped almost six years of deflation in July 2004 and consumer prices rose 1.6 percent in September, the biggest increase in seven years.

Retail sales climbed in September at the slowest pace in two years, the government said Monday, suggesting that the surge in demand that pushed rents higher has begun to abate.

In Causeway Bay, home to luxury-goods retailers, prime rents almost doubled in the year through June, leapfrogging the Avenue des Champs-Elysées in Paris as the second-most-expensive shopping area in the world.

The district is now second only to Fifth Avenue in New York, according to an Oct. 26 report by Cushman & Wakefield.

The study said booming tourism from mainland China as well as from Europe and North America had driven up demand for floor space.

As a result, a host of Hong Kong businesses are feeling the pinch.

The retailer Giordano, which has 86 stores across Hong Kong, in August posted smaller than expected first-half profit. Its operating margin - operating profit as a percentage of sales - narrowed to 6.2 percent from 8.4 percent.

The company's chairman, Peter Lau, said rents, some of which had doubled from a year earlier, were "unhealthy" and he did not rule out closing some outlets. Giordano shares have fallen nearly a fifth in the past three months.

"It is serious," said Paul McKenzie, head of consumer-goods research at CLSA, who cut his rating on Giordano to "sell" from "underperform" on Oct. 26. Some landlords "have gotten very, very greedy. It's pretty much a problem across the board."

Rent increases are being driven by luxury-goods companies like LVMH Moët Hennessy Louis Vuitton and Gucci Group, which have set up flagship stores in the city.

The British luxury-store chain Harvey Nichols in September opened its first Hong Kong outlet, nestled beside Mandarin Oriental's new Landmark Mandarin hotel, where room rates start at $515 a night in the heart of the city.

With growth in visits from China cooling - arrivals from the mainland grew just 2.2 percent in the first nine months, compared with 46 percent last year - and mortgage rates at banks at five-year highs, sales at Giordano and other retailers are no longer rising fast enough to cover higher rents, said McKenzie at CLSA.

In SoHo, a restaurant district near an 800-meter, or 0.5-mile, escalator that conveys workers from the Mid-levels residential area to and from their offices, other outlets are also struggling.

Tai Cheong Bakery, whose egg tarts the former Hong Kong governor Chris Patten praised as the best in the city, chose to move after its landlord more than doubled rent.

"Restaurants in Hong Kong are not making as much money as people think," said J.R. Robertson, managing director at El Grande Group, which owns and operates 12 restaurants and bars in Hong Kong, including Grappas Cellar at Jardine House, Hong Kong Brew House in Lan Kwai Fong and East End Brewery in Causeway Bay. "A lot of these guys are hurting at the moment."

While analysts say the market will eventually settle, it may change the business mix in the heart of Hong Kong, said Tao at CSFB.

"If this continues, it won't be possible to buy a lunch box in Central in one or two years," he said. "You can't eat luxury handbags."

Retailer's earnings slip on one-off charge

Hong Kong fashion retailer I.T posted a decline in interim profit due to a one- off charge for share option expenses.

Hong Kong Standard
Wednesday, November 09, 2005

Hong Kong fashion retailer I.T posted a decline in interim profit due to a one- off charge for share option expenses.

The retailer had a net profit of HK$30.2 million for the first half ended August, down 8.33 percent from a year earlier.

Stripping out the share option expenses of HK$13.4 million, net profit rose 32.5 percent to HK$43.6 million. Executive director Alva Chan said there would be no similar charges in the second half. Under the international accounting standards recently adopted in Hong Kong, share options must be treated as an expense and charged to the profit and loss account.

Shares of I.T fell 11 percent Tuesday to close at HK$0.97.

I.T's turnover increased 37.4 percent to HK$568 million in the half-year. Its gross profit margin was 62.7 percent, versus 62.5 percent a year earlier.

The company said a cold March and a rainy June hurt sales. Comparable store sales gained just 0.3 percent. Rent was the company's biggest expense, accounting for 22.9 percent of sales compared to 21.8 percent the year before. However, one analyst who follows the company said its biggest problem going forward would be interest rates, since rents had already peaked.

Mortgage rates, which have risen seven times this year, would temper consumer spending.

I.T's 50-50 joint venture with listed apparel maker Glorious Sun Enterprises operated 115 stores on the mainland and 14 stores in Taiwan at the end of August. The venture recorded a loss of about HK$5 million in the first half, but I.T said it may break even next year.

should i move this thread to the HK forum?

Thanks for your help null!

Lane Crawford set for mainland push

Lane Crawford plans to open wholly owned department stores in the mainland in the next two to three years to cash in on the liberalization of the country's retail sector.

Prudence Ho
Hong Kong Standard
Monday, November 14, 2005

http://www.thestandard.com.hk/newsimage/20051114/david.jpg

Lane Crawford plans to open wholly owned department stores in the mainland in the next two to three years to cash in on the liberalization of the country's retail sector.

"We are actively looking at the China market, particularly in Beijing and Shanghai," said David Riddiford, who became the 155-year-old company's president last month.

From December 11, China will allow foreign retailers to run 100 percent owned stores as part of its commitments in joining the World Trade Organization.

The plan is to open one store each in Shanghai and Beijing, or two stores in the capital in the next two to three years, Riddiford said.

Locally, Lane Crawford will relaunch its Pacific Place outlet Saturday, and it plans to use the same new- concept formula to open new stores in the mainland.

It won't be expanding very fast across the border, however.

"The big question mark about China is how fast will the Chinese consumers develop into a critical mass," Riddiford said.

Only 1 percent of China's population - or 13 million - earns more than US$5,000 (HK$39,000) a year, while 56 percent earn less than US$500, according to a CLSA report.

This means the China market is still not mature enough for high-end department stores like Lane Crawford.

Lane Crawford entered the China market five years ago, when it opened its Shanghai store in October 2000. The company also has two franchise stores in Harbin and Hangzhou.

In Hong Kong, the relaunch of Lane Crawford's 50,000-square-foot Pacific Place outlet cost about HK$120 million and is part of a continuing modernization program for its four stores in the territory.

The next in line for a face-lift is the Times Square store, with work starting in June next year and expected to be completed in the second half of 2007, Riddiford said.

The modernization program, which started in 2003 under the watch of then company president Jennifer Woo, aims to make the stores more relevant for today's consumers by giving each store a distinct personality.

"Each of the stores should have the same DNA, somehow representing the brand that we're carrying," Riddiford said.

"Outside that core, each should have its own distinction."

For example, the IFC store focuses on designer women's wear, while Canton Road will be for men's wear and Pacific Place for casual wear and footwear.

"It gives you different reasons to visit IFC and Pacific Place," Riddiford said.

The IFC store, the first to carry the new concept, opened last November. The Queen's Road outlet closed the day before the IFC store opened. Sales at IFC are more than 100 percent higher than at Queen's Road.

Facelift gives grand old lady niche appeal
19 November 2005
South China Morning Post

Lane Crawford's Pacific Place branch, which reopens today, has been renovated into a luxurious hang-out following last year's high-profile opening of its IFC flagship.

The double-storey Pacific Place branch, which cost $120 million to renovate, has dumped the routine mannequins and replaced the traditional window display with creative installations by renowned local and international artists such as Jade Jagger, the London-based creative director of British jeweller Garrard. The luxury jeweller is also making its Hong Kong debut at the store. Inside, the store is clearly divided into sections with different themes, each featuring interactive visual projections to entertain customers.

David Riddiford, president of Lane Crawford, said the company did not see fellow retail stores such as Seibu, which has a branch at Pacific Place, and Harvey Nichols, as direct competitors.

Mr Riddiford said the Pacific Place branch targeted a different group of consumers - those who are more into "young, contemporary and chic" shops.

"We are not there to compete.

"They [Seibu] have big brands but ours are much more niche. Customers have different reasons to come to us," said Mr Riddiford.

New and exclusive brands at the renovated store include Aesop and Bliss cosmetics; Alessandro de Benedetti women's wear and Theo Fennell jewellery.

Mr Riddiford said that the next step would be to renovate the Times Square branch, which will be designed to suit Causeway Bay shoppers.

The project will not begin until the middle of next year, with completion in the summer of 2007.

He also revealed plans to open a home lifestyle store. "We want to create a destination store, but the challenge is to find the space. We are hoping to find a spot that's 30,000 to 50,000 square feet," Mr Riddiford said.

The group hopes to open its Beijing store before the Olympics.

Hong Kong retailers feel pinch from soaring rent

HONG KONG, Dec 2 (Reuters) - Hong Kong rent rises are starting to erode retailers' profit margins, according to a survey released this week that coincided with a drop in earnings at cosmetics chain Sa Sa International Holdings Ltd.

With the economy tipped to grow at least 7 percent this year and visitor numbers hitting a record 2.14 million in October, the survey by property consultants Jones Lang LaSalle showed 90 percent of the city's retailers reported higher or stable turnover in the last six months.

But 26 percent said profit margins had narrowed, compared to just 3 percent in a similar survey a year earlier.

Four in every five retailers expect turnover to rise next year, although 17 percent said profit margins would fall and 33 percent of respondents thought margins would be stable.

Kenneth Tsang, head of Greater China research at Jones Lang LaSalle, said rents had risen 16.7 percent for street shops in the first nine months of 2005. Rents at major shopping centres were up 12.1 percent.

In Causeway Bay, one of Hong Kong's main shopping areas, landlords had lifted rents 21.2 percent, he said.

"That's typical for major shops in prime areas, a lot of people are bidding for those sites," he said. "But next year we expect lower rent rises, probably about five percent."

Some iconic outlets, such as the shop where former British governor Chris Patten used to buy his custard tarts, have been forced to move by landlords eager to keep rents in line with a 75 percent recovery in property values since mid-2003.

On Wednesday, cosmetics firm Sa Sa blamed rising rents at its 50 stores in Hong Kong and Macau for a 4.7 percent drop in net profit in its first half, a period when sales rose 14.5 percent.

"Rents are still high at the moment so we are more conservative about our second half performance," Sa Sa Chairman Simon Kwok complained.

Sa Sa's stock price has dropped 34 percent this year and nearly five percent this week. Fashion chain Giordano International Ltd. has lost 10 percent this year.

Shares Esprit Holdings , whose main market is Europe, are up 17 percent in 2005.

Retail sales growth slows for third straight month

Hong Kong retail sales growth slowed for the third month running in October as the projected boost from the opening of Disneyland lagged analysts' expectations and rising interest rates damped consumer spending.

Lee Yuk-kei
Hong Kong Standard
Wednesday, December 07, 2005

Hong Kong retail sales growth slowed for the third month running in October as the projected boost from the opening of Disneyland lagged analysts' expectations and rising interest rates damped consumer spending.

Sales climbed 4.8 percent compared to the same month last year, down from September's 4.9 percent pace and a 6.2 percent rise in August, the Census and Statistics Department said Tuesday.

"The slowing down was largely due to the significant slowing of tourist arrivals," said Vincent Kwan, chief economist at Hang Seng Bank. "Tourist growth eased to single digits in the past few months, compared with the previous double-digit" increases.

Retailers originally expected the September opening of Disneyland would spur consumer spending but wound up disappointed. "The Disneyland effect was weaker than expected because it failed to attract more mainland tourists to the city," said Daniel Chan at DBS Bank (Hong Kong). "They are not familiar with Disneyland, so they prefer to go to Ocean Park."

Hang Seng Bank's Vincent Kwan added that retailers had overestimated the beneficial effect the theme park's opening would bring.

Although the growth in mainland tourism slowed, and warm weather in October discouraged spending on clothing, domestic consumption was still increasing robustly as reflected by rising supermarket sales, said Hong Kong Retail Management Association chairman Kwan Pak-hoo. His group expects retail sales this month will rise 5 percent from year-ago levels. Kwan reckons retailers can expect moderate to low single-digit sales increases in the first quarter of next year, held down by rising interest rates and uncertainty over avian flu.

"Looking ahead, the generally positive economic and employment outlook, [wage increases] and the further expansion of inbound tourism should continue to render support to overall retail sales," a government spokesman said.

Bossini International Holdings attributed a significant drop in interim profit to poor gross margins on the mainland and Taiwan
8 December 2005
South China Morning Post

Casual wear retailer Bossini International Holdings has attributed a significant drop in interim profit to poor gross margins on the mainland and Taiwan, marketplaces in which retailers are locked in a continuing price war.

Executive director Kathy Chan said the group had earlier invested heavily to market its new brand, Sparkle, in China.

"The brand's performance was not good because many new brands emerged in the mainland with very low prices," she said.

Ms Chan's comments came while unveiling the group's interim results yesterday, which showed operating profit in the mainland fell to $1 million in the first half - an 83 per cent drop from $6 million a year ago.

Its Taiwan business recorded an operating loss of $6 million in the first half, from a profit of $10 million previously. Overall net profit fell 27 per cent to $45 million in the first half to September on turnover that was up 13 per cent to $997 million.

While the Sparkle brand was "too small" and not making a profit, Ms Chan said the group would continue to invest in the product and aimed to see a profit next year.

Earlier, Bossini said it would accelerate the expansion of its mainland operation, with a target of doubling the number of its outlets there to 1,000 in the next five years.

In Hong Kong, Ms Chan said the firm had failed to raise product prices in the first half, even though product costs and rents were rising, because of intense competition.

"We will be very cautious in considering raising prices in the second half," she said.

The group was aware of the difficulties in raising profit margins in Hong Kong, Ms Chan said, and the strategy was to boost sales by more promotions and discounts.

"We will also try hard to reduce our administrative costs. We expect rents to surge 20 per cent in general," she said.

Ms Chan said a Tsim Sha Tsui Bossini shop was forced to close recently because the landlord wanted to double the rent.

"We could not afford that. Otherwise we will have to operate a gold mine there," she said, adding that it would open one or two shops in Hong Kong in the second half.

The group will pay an interim dividend of 1.8 cents per share, the same as last year.

SO MANY GOOD NEWS!!!! SO HARD TO DIGEST THEM ALL!!!

In Hong Kong, Shopping Is an Art Experience

http://graphics8.nytimes.com/images/2005/12/24/arts/hongtwo.span.jpg
Picasso's "Parade" (1917), which was exhibited at the International Finance Center mall in Hong Kong.

By ALEXANDRA A. SENO
International Herald Tribune
Published: December 24, 2005

HONG KONG, Dec. 23 - More than a decade ago, the French artist Jean-Michel Othoniel spent a month working in relative obscurity at the Hong Kong Art Museum, making fanciful glass creations for a group show called "Too French." This month, he became very, if not too, Hong Kong.

http://graphics8.nytimes.com/images/2005/12/24/arts/hong.184.jpg[/img
[i]A piece at the "Box" show at Langham Place in Hong Kong.

Amid much fanfare and press attention, Mr. Othoniel was once again in the city to unveil his latest piece: a 105-foot string of milky-white giant handblown glass beads. Commissioned by the luxury brand Chanel, it is meant to look like a pearl necklace and is installed as permanent art in a multilevel picture window of Chanel's recently refurbished boutique in the Prince's Building, in the central business and retail area.

Mr. Othoniel, whose work is in the collections of the Georges Pompidou Center and the Museum of Modern Art, is one of five artists enlisted by the architect Peter Marino for the new store.

"In Hong Kong, people are more concerned about shopping," Mr. Othoniel said. "If the people don't come to the museum, you must go to the public."

The Hong Kong art critic and curator Oscar Ho said: "The museum is not a common space in Hong Kong. On Sundays, you go have dim sum and then go shopping. The shopping mall is the common plaza, like the plaza in Italy. Art is reaching out; hiding out in the sacred halls of the museum is no longer workable."

Major museums, all run by the government, are often nearly empty even on weekends, suffering from what some critics say is under-marketing and "safe" programming deficient in imagination.

As debate continues to simmer over the government's multibillion-dollar development project on reclaimed land in the West Kowloon district, the initiative - intended to infuse the territory with art - is stirring questions about Hong Kong and culture.

"West Kowloon has made us ask, 'Where are we with art?' said Karen Chang, an organizer of a wildly successful Picasso exhibit at the International Finance Center mall last year. "It opened up that whole conversation."

In many ways, the finance center started the trend by sponsoring the exhibition of "Parade," a 341/2-foot-high, 53-foot-wide stage curtain painted in 1917 by Picasso. "The French were just astonished," said Ms. Chang, a principal at the marketing consultancy CZAR Partners hired by the financial center, when the proposal was made to show the French treasure in a mall.

Somewhat reluctantly at first, the Georges Pompidou Center agreed, and the free exhibition was estimated to have attracted some two million visitors in the city of seven million residents. The same mall has since had much-talked-about shows by the mainland-born Wu Shanzhuang and the hip local artist Carrie Chau, as well as fashion exhibitions.

In June and July this year, Cityplaza, a mall in Taikooshing, staged a successful show featuring dinosaur fossils. It was the first time that such an event had been held in Hong Kong, and hundreds of thousands came to view the exhibition. The items, including an 85-foot-long skeleton, were on loan from the Beijing Museum of Natural History and the Sichuan Zigong Dinosaur Museum.

Also this summer, another complex, Langham Place in the Mongkok district, sponsored "Box," an innovative program featuring 31 top Hong Kong artists who were asked to express their experience of the city. Such locally revered names as the product designer Alan Chan, the multimedia artist Simon Birch and the photographer Wing Shya created works that were displayed throughout the 15-story mall, in what became the largest public art installation ever in the territory.

Paul Katz, a principal at the international architecture firm Kohn Pedersen Fox, said: "Urbanism in Hong Kong is built around density and public transportation. Given that there are no world-class institutions in Hong Kong that will attract local and regional visitors, it is better to have the art as a part of the urban experience, which can be the mall, even if it is linked to commercialism and fashion.

"Fashion, culture and politics are intertwined with art anyway. Experiencing art in a public realm is as authentic as a free-standing museum."

The Hong Kong model has caught the attention of property developers in China, which is building thousands of new malls. Mr. Katz has built several projects in Hong Kong and is not surprised that clients in China look to the former British territory in the south. The mainlanders have recently been asking him to include spaces purposely built for art.

When Ms. Chang, the Picasso show organizer, was asked by Langham Place to come up with something for the 2005 holiday season, she persuaded the developers to sign up the men of the "Urban Dream Capsule" - acclaimed artists from Australia. Since Dec. 13, they have been living full time in a 500-square-foot glass pod, on view 24 hours, for an interactive performance art experience. (Their stay concludes Jan. 3.)

It all brings to mind a speech from last July, when the luxury department store Lane Crawford was the site of a book promotion for and exhibition of the work of the Chinese artist Wu Shanzhuan. To open the event, Claire Hsu, the director of the Asia Art Archive, said: "If it's true that shopping is the favorite pastime of people in Hong Kong, and art is practically off the radar, then let the department store become the museum. Or in Wu's equation, if shopping equals the museum and the museum equals shopping, then shopping must be creation! So, after all, we are all artists!"

Hong Kong retail sales growth slows
By Hanny Wan
Bloomberg News
TUESDAY, JANUARY 3, 2006

HONG KONG Hong Kong's retail sales grew at the slowest pace in more than two years in November, suggesting that rising interest rates are eroding consumer spending, the government said Tuesday.

Sales rose 4.2 percent from a year earlier to 15.8 billion Hong Kong dollars, or $2.04 billion, after climbing 4.8 percent in October, the government said. Some economists had expected retail sales to gain 5.2 percent.

"Many people expect that the rising interest-rate cycle will end soon, so its impact on consumer spending should become smaller," said Henry Tsoi, an economist at Hang Seng Bank, who had forecast 5 percent growth. "Interest rates put pressure on those who have to pay for mortgages and reduce their disposable income."

The city's banks, including HSBC, last month raised lending rates to their highest in more than four years following increases by the Federal Reserve and Hong Kong's de facto central bank. Home loans fell 9.4 percent in November as fewer people bought second-hand property, the Hong Kong Monetary Authority said.

"Consumer sentiment might have turned more cautious more recently in face of the interest rate hikes and the consolidation of the property market," the government said.

The pace of retail sales growth in November was the slowest since October 2003. Economists typically combine figures for January and February to eliminate distortions caused by the timing of the Lunar New Year holiday.

By volume, retail sales climbed 3.6 percent in November after increasing 3.7 percent in October, the government said. Sales of fuels rose the most by volume, gaining 8.3 percent from a year earlier, according to the government. Sales of footwear and clothing accessories rose 7 percent.

Furniture sales dropped 6.6 percent. Sales of jewelry, timepieces and valuable gifts decreased 3.4 percent.

Retailers brace for rent rises as Tsim Sha Tsui link plan takes shape
11 January 2006
South China Morning Post

Retailers in Tsim Sha Tsui have been told to expect a hefty rise in rents as plans take shape to develop a network of underground walkways linking the MTR station to nearby commercial buildings and shopping centres.

Some analysts said the area could be transformed into a shopping and business hub like that of Shinjuku in Tokyo.

Central to the project will be two new underground walkways being planned by Mass Transit Railway Corporation (MTRC) to link Tsim Sha Tsui station to the new commercial and shopping towers to be built on the existing sites of the Hyatt Regency Hotel and Tung Ying Building. Both blocks are expected to be demolished for redevelopment this year.

According to initial plans, the design of the underground links will model that of the walkways linking Causeway Bay MTR station and Times Square. Commuters can head straight to the shopping arcade via a tunnel after getting off the train.

Talks are under way between the MTRC and Chinese Estates Holdings, the owner of Tung Ying Building.

Tung Ying Building will be redeveloped into a 30-storey retail complex, according Chinese Estates Holdings, which bought the 40-year-old office building from the Hotung family for $1.1 billion in 2003.

A spokeswoman for Chinese Estates Holdings said it was not prepared to comment.

Some Tsim Sha Tsui shopkeepers have already complained about having been asked to pay 20 per cent more in rents since the Tung Ying Building redevelopment was announced last year.

They say landlords in the district are taking advantage of the new underground links to further increase rents.

According to Midland Realty records, a two-storey, 2,200 square foot fashion shop in Granville Road, near the Tung Ying Building, is paying rent of $210,000 a month. This compares with $160,000 for a 700 sqft shop in Cameron Road, near an existing MTR exit.

Victor Lai Kin-fai, Centaline Surveyors managing director, said: "Landlords will, of course, take advantage of the news to increase rents. But whether an underground network could help boost the businesses of those on street level remains to be seen."

He cited as an example the new exit at Mongkok MTR which links the station with Langham Place. "The impact does not seem to be great. In fact, Langham Place itself does not seem to benefit much," Mr Lai said.

But Pang Shui-kee, managing director of S K Pang Surveyors, said the underground project would certainly help boost pedestrian flow in the area of Tsim Sha Tsui East and Nathan Road.

He said: "I do not think shopkeepers would mind paying more in rent if their businesses are going to do well."

Meanwhile, a new exit is also being planned to link the Tsim Sha Tsui MTR station with the Hyatt Regency Hotel site. The Tsim Sha Tsui project coincides with a $1 billion project by the MTRC to upgrade nine of its busy stations in urban areas.

Braccialini opens regional office and retail shops in Hong Kong
Thursday, January 12, 2006
Government Press Release

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Famous Italian brand, Braccialini, has shown strong confidence in the business environment in Hong Kong with substantial new investments here. The company officially announced today (January 12) the opening of its regional office and two shops in Hong Kong.

Braccialini is a designer and manufacturer of handbags, shoes and leather goods and accessories. These products are marketed under the company's own brands Braccialini and Tua by Braccialini, as well as licensed brands Mariella Burani, Mila Schon, Looney Tunes (Warner Bros registered trademark) and Vivienne Westwood.

The new Hong Kong office, registered as Salkin Ltd, is a wholly-owned subsidiary of Braccialini. It will serve as the Asian regional headquarters of the company, responsible for various functions including retail operations, sales and marketing, logistics and finance. The Hong Kong office will also be charged with the responsibility for developing and expanding the company's business networks in other markets throughout Asia.

Located in Fashion Island, Causeway Bay and International Financial Centre, Central, the two new shops will showcase products with the Braccialini brand.

The CEO of Braccialini, Mr Riccardo Braccialini, said, "We are very excited about our expansion into Hong Kong - one of our key international markets. The city is a centre for international lifestyle and fashion. Its central location in Asia and expertise in international trading make Hong Kong one of the few cities where we see the potential to conduct various business functions for all of our brands. This is also why we decided to set up our first wholly-owned office outside of Italy and retail outlets in Hong Kong – all at the same time."

"We will continue to look for business partners in Asia to help develop and expand our regional business. At the same time, we are planning to expand our operations further in Hong Kong," Mr Braccialini said.

According to Mr Braccialini, the company expects to open more shops this year in Hong Kong and other markets in Asia. It will also explore opportunities to open outlets to feature other brands under Braccialini.

The Director-General of Investment Promotion at Invest Hong Kong, Mr Mike Rowse, congratulated Braccialini on its office and shop openings in Hong Kong. "We are delighted to see another leading international brand using Hong Kong as its base to develop regional markets. Our unique advantages as the international fashion centre, regional business hub and popular tourist destination make our city the best location to showcase the latest products to Asian consumers and to manage the business operations in the region."

Founded in 1954 in Italy by Roberto e Carla Braccialini, Braccialini is a designer and manufacturer of handbags, shoes and leather goods and accessories. Its products feature leather trimmings, floral motifs, bright colours and embroidery -- combining traditional Italian arts and craftsmanship. Braccialini currently operates 15 mono-brand shops, over 90 corners/shop in shops and about 1,000 retail outlets worldwide. For more information, please visit the website at http://www.braccialini.it.

Hong Kong consumer confidence best since '99

Hong Kong consumers remain among the most positive in Asia Pacific regarding the first half of 2006, trailing only Vietnam, according to MasterCard survey.

Prudence Ho
Hong Kong Standard
Thursday, January 19, 2006

Hong Kong consumers remain among the most positive in Asia Pacific regarding the first half of 2006, trailing only Vietnam, according to MasterCard survey.

Hong Kong consumers scored 85.8 in the survey on their outlook for the six months to June, the highest recorded in the city since 1999. Vietnam recorded 93.1, with confidence boosted by an economy that surged 8.2 percent in 2005, the fastest growth in a decade.

"Hong Kong's strategic position in China's economy continues to pay dividends, reflected by its strong consumer confidence," said Yuwa Hedrick-Wong, economic adviser to MasterCard International in Asia Pacific.

Hong Kong consumer confidence was reflected by high scores across all five measured factors, with employment registering the most at 95.3. The economy notched up 91.6, the quality of life 83.7, regular income 82.8, and the stock market 75.7. Zero is the most pessimistic, 100 the most optimistic, with 50 neutral.

The government in November raised its 2005 full-year growth forecast for Hong Kong to 7 percent from 4.5-5.5 percent, citing robust exports, consumer spending and capital investment. The Hang Seng Index gained 13 percent in the past 12 months, and has risen 4 percent since the New Year.

Hedrick-Wong pointed out that Hong Kong's employment growth has been very strong with unemployment dropping to 5.3 percent in late 2005, a three-year low. This has in turn supported domestic consumption, even as interest rates have risen 2.5 percent since the beginning of 2005.

China came third in the confidence index, with a score of 82.3, while Japan and Singapore posted the largest improvements.

In Japan consumers were optimistic on all five measured factors for the first time since the survey began in 1993. Malaysian consumers' confidence is increasing. Taiwan was the lowest performer, its 26.6 score reflecting widespread dissatisfaction with high unemployment, the survey showed.

The survey was conducted in October-November last year and involved 5,404 consumers across 13 Asia Pacific markets.

Retailers expand into housing estate malls
20 January 2006
South China Morning Post

Coffee chain Starbucks and cosmetics retailer SaSa are among retail chains setting up on public housing estates since management of shopping malls at estates was privatised under the Link Reit, the management company said yesterday.

Clothing chains are also expanding their presence on estates, Link Management said.

Chains such as Baleno, Marathon Sports and Starbucks had opened a combined 44 outlets in the malls since November, when the Link real estate investment trust listed on the stock market, Link Management leasing and control manager Helena Chan said.

Of these, 26 were shops and the rest cafes and restaurants. The Baleno group added three more outlets to the 11 it operates.

More than 200 vacant shop spaces have been leased out since the middle of last year.

"We created something out of nothing," Ms Chan said.

"We are getting more interest from [known] brands to get more space in the malls, as they are seeing that business here is not bad," she said.

Ms Chan said mall managers had more flexibility in choosing tenants than they had under Housing Authority management.

To complement the expansion at the malls, 11 more ATMs have been installed.

The malls saw 20 per cent more customers in the week before Christmas than in the last week of November, marketing and promotions manager Germaine Lui said.

She predicted customer volume this month and in February would also be 20 per cent higher than in November, thanks to the Lunar New Year holiday.

Link Management may extend mall operating hours during the holiday period, Ms Lui said.

Shopaholics rush for New Year bargains
23 January 2006
South China Morning Post

Shopping fever is hitting Hong Kong as consumers swamp malls and stores in major shopping districts to bag the best bargains for the Lunar New Year next weekend.

Some fashion shops yesterday were anticipating turnover to increase by as much as 30 per cent over last year as shopaholics were back in force after the Christmas and New Year holidays.

In Causeway Bay, shops were decked with colourful banners reading "Final Clearance", "Chinese New Year Sale", or "50 per cent off".

Shoe shops were gearing up for a frantic last-minute spending spree. People do not buy shoes in the first month of the Lunar New Year because they believe it brings bad luck. So there is a rush to buy shoes before the New Year.

One shopper, accountant Joyce Lam of Shau Kei Wan, bought three pairs for the new year. "I think they are the best buys - slightly over $3,000 for three pairs. My company gave a New Year bonus of two months' salary this year. I think I should be able to afford more," said a delighted Ms Lam.

Stores selling dried seafood and traditional New Year delicacies reported a rise in businesses despite reports over safety of such foods.

Last Saturday, the Food and Environmental Hygiene Department issued a warning after a sample of sweetened lotus seeds was found to contain too much sulphur dioxide preservative, which may cause asthma.

A shop assistant at Tai Hing Trading Company in Western, which sells preserved seafood, said: "If you buy better-quality ones and soak the seeds well in water, there shouldn't be any problem."

Danish footwear giant ECCO grows in Hong Kong
Thursday, January 26, 2006
Government Press Release

Danish footwear giant ECCO celebrated its newest expansion in Hong Kong today (January 26).

The Regional Managing Director of ECCO Asia Pacific Ltd, Mr Michael Sorensen, said Hong Kong was a strategically important market for the company's growth in Asia. "Hong Kong is a unique and strategic market for us, providing an ideal platform for our long-term regional business development in all areas, including retail, franchise and wholesale," he said.

In 2002, the company opened its Asia-Pacific headquarters in Hong Kong for retail, sales, sourcing, distribution and general management functions. Since its opening, the office has expanded from a team of three to some 30 employees at present. In response to its business growth, the company decided to take up larger office premises for the regional headquarters.

In addition, the company will extend its regional reach to more markets, such as Korea, from its base in Hong Kong. The Hong Kong office currently manages all activities in Mainland China, Japan, Singapore, India, The Philippines, Thailand and Taiwan.

"ECCO has been demonstrating strong confidence in the consumer market in Hong Kong. Our first concept shop in Hong Kong was opened in March, 2003, despite the outbreak of SARS. It soon proved to be the right decision. Today, we are celebrating the opening of our fifth shop in Telford Plaza. We will also continue with our steady growth here, with plans to open a flagship store, as well as additional concept shops and shop-in-shop outlets, in the next few years," Mr Sorensen said.

"Apart from retail, we continue to work closely with our business partners to increase exposure of the brand through consignment sales at department stores and franchisees. With our strengthened presence in Hong Kong and in the region, the gross turnover of ECCO in Hong Kong increased by 50% in 2005 as compared to 2004."

The Associate Director-General of Investment Promotion at Invest Hong Kong, Mr Simon Galpin, was delighted to see ECCO's continued expansion of its presence in Hong Kong, saying ECCO was an excellent case to demonstrate the opportunities that Hong Kong offered for foreign brands. "Companies could conduct a range of business activities – including retail, franchise, business and finance management, logistics and regional business development - all in one location. We wish ECCO all the best and look forward to celebrating its further expansion in Hong Kong."

Founded by Karl Toosbuy in Denmark in 1963, ECCO is a family-owned business employing approximately 9,000 staff around the world. It has more than 3,000 shops in more than 63 markets worldwide and produces 12 million pairs of shoes every year. For more information, please visit the website at www.ecco.com.

Retail sales defy WTO fears with 6.9pc jump
Lee Yuk-kei
Hong Kong Standard
Friday, February 03, 2006

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Hong Kong retail sales growth picked up in December, breaking a four-month streak of slowing gains, as the public spent more during the Christmas festival amid a buoyant economy and better work prospects.

Sales increased a faster-than-expected 6.9 percent year-on-year to HK$19.3 billion, compared with a 4.1 percent jump in November, the Census and Statistics Department said Thursday. Sales volume rose 5.8 percent, up from a 3.5 percent increase a month earlier.

"The better-than-expected sales growth was mainly due to the Christmas festival," said Tai Hui, economist at Standard Chartered Bank (Hong Kong). The high-spending holiday season "was fully bolstered by the full-swing economic recovery and rosy employment outlook," he said.

Even so, the pick-up in retail sales did not indicate a turnaround in the domestic retail market, as the seasonal effect of Christmas and Lunar New Year distorted the figures, Hui said. He estimated retail sales growth this year will slow to a historical average of 4 percent to 5 percent.

The December figures were in line with retailers' expectations, as cold weather spurred spending on clothing while the World Trade Organization meeting hampered sales in some areas, said Hong Kong Retail Management Association chairman Kwan Pak-hoo.

The outlook for consumer spending was positive, according to a government spokesman, who did not give a detailed outlook.

"Despite the higher interest rates, consumption spending should continue to fare well on the back of the optimistic economic and employment outlook ... as well as the continuous expansion of inbound tourism," the spokesman said. The faster growth in retail sales volume indicated "that consumer sentiment was fairly strong during the festive season."

Sales value of miscellaneous items increased 10.9 percent, while department store sales surged 9.5 percent, ahead of clothing, footwear and allied products at 8.6 percent.

Durable consumer goods, including motor vehicles and parts, fell 1.9 percent in value.

For the year as a whole, total retail sales increased 6.8 percent in value, slower than the 10.8 percent growth in 2004, mainly due to the slowdown of mainland tourist arrivals, stagnant salaries and the accumulated 3.5 percent increase in interest rates during the year.

Hong Kong's economic growth reached 8.2 percent in the third quarter of the year, while the government forecasts full-year growth of 7 percent.

The unemployment rate declined to 5.3 percent at the end of 2005 from 6.1 percent earlier in the year.

A Bloomberg survey of 15 economists had forecast a rise of 4.5 percent in sales value for December.

Italian creative jewellery brand sets up first boutique in Hong Kong
Wednesday, February 22, 2006
Government Press Release

Pianegonda, the prominent Italian creative jewellery brand, has announced the opening of its first store in Hong Kong at The Landmark.

H&F Partners, Pianegonda's franchise partner, expressed strong confidence in the retail market in Hong Kong and plans for continued expansion.

The Managing Director of H&F Partners, Mr Renaud Litre, said the choice of Hong Kong to first launch Pianegonda in Asia was a tribute to the energy and modernism of the city. "Pianegonda is innovative in style and explores new techniques to uncover new potential. Hong Kong has always been a trend leader in Southeast Asia region. So, I am certain Pianegonda will have a strong appeal here where both men and women have proved again and again they are willing to experiment and be part of a fresh new trend."

According to Mr Litre, the company plans additional Pianegonda stores here. The second store is scheduled for June, 2006, in Pacific Place.

Mr Litre said Hong Kong was an ideal location for them to manage operations in the region. "The convenient location of Hong Kong enables us to have easy access to Mainland China. This city also is Asia's premier business hub, with excellent infrastructure and logistical support," he said.

Apart from Pianegonda, the company has also introduced another popular jewellery and accessory brand, Agatha, to the region. H&F Partners is enthusiastic about bringing more brands to the region through Hong Kong.

The Associate Director-General of Investment Promotion at Invest Hong Kong, Mr Simon Galpin, congratulated the company on its new Hong Kong store. "We are delighted to see another leading consumer brand recognising Hong Kong as the strategic platform to showcase its products to the region," he said.

"Hong Kong's role as Asia's centre of style and fashion has become increasingly important. Our vibrant consumer market and strong tourism and retail sectors have created a very unique and attractive location for international retailers in Hong Kong. The continuous growth of our retail clusters also enhances Hong Kong's attractiveness to more visitors to shop and learn about the latest trends. We look forward to working closely with H&F Partners to bring more brands to Hong Kong."

For the past two years, H&F Partners has introduced creative and innovative European jewellery brands to Hong Kong and the rest of the Asia Pacific region. The Hong Kong operation serves as H&F Partners' regional headquarters for sales and marketing activities within Asia Pacific. H&F Partners also has offices in Taipei and Shanghai. For more information, please visit the company's website at www.hf-partners.com.

Fashion chain Esprit's H1 meets expectations
By Sophie Taylor

HONG KONG, Feb 22 (Reuters) - Esprit Holdings Ltd. , the world's fifth most valuable clothing retailer, matched expectations on Wednesday with a 15.7 percent jump in interim earnings despite a dip in store sales growth from its largest market of Europe.

Esprit -- which has a market value of some US$10.2 billion and draws the bulk of its income from Europe -- blamed a drop in growth of comparable-store sales to 5 percent, versus 9 percent a year ago, on a poor product mix on its women's clothing line and management problems.

Executives blamed that weak performance on inexperienced managers plus inadequate merchandise -- a problem discovered only in October.

"I am very angry at myself that I just discover the problem so late," chief executive Heinz Krogner said in Hong Kong. "It's a product issue, not a strategic one."

Krogner said that they had employed several market analysts and marketing specialists to help them to return to stable growth in the year head, adding that the company would be able to match its 20 percent sales growth target.

Esprit, which sells mid-priced goods ranging from T-shirts to suits and bed linen, reported a net profit of HK$1.87 billion ($241 million) for the six months ended Dec. 31, versus HK$1.62 billion a year ago.

That result generally matched a forecast of HK$1.9 billion, according to the mean consensus of six analysts polled by Reuters Research. Turnover climbed 13.2 percent to HK$11.83 billion.

The company will pay an interim dividend of HK$0.50 per share on April 7.

Krogner said that the company is looking to its Asian market to drive growth in future and added that Malaysia and Singapore were their fastest growing markets in the region. They were optimistic about the India market, where it is expanding its wholesale business.

Net margins stood at 15.8 percent in the first half from a restated 15.5 percent.

"Generally it was within expectation but the only disappointment was the merchandising mix up they had," said Mohan Singh, head of Asia consumer Research at BNP Paribas Peregrine.

PURSUING A GLOBAL BRAND

Shares in Esprit, a favourite of investors because of its reliable earnings growth, closed down 1.37 percent at HK$64.60 on Wednesday before the results were announced.

The stock had surged 23 percent since the start of the year to Tuesday's close, and was trading at about 21 times forward earnings versus a multiple of about 23 for Sweden's Hennes & Mauritz , 15.2 times for Gap Inc. and 23.4 for Inditex , which operates the Zara chain.

Esprit pledged on Wednesday to keep up efforts to carve out a global brand.

The company, which makes around half its sales in Germany alone, said in September it expects its loss-making U.S. business to turn around in three to four years.

Analysts expect Esprit's full-year net profit to rise almost 17 percent to HK$3.9 billion, according to Reuters Estimates, versus HK$3.34 billion in 2005.

Executives did not offer a specific forecast for the year ahead.

Esprit in acquisition drive
Hong Kong Standard
Thursday, February 23, 2006

Fashion retailer Esprit Holdings is eyeing more acquisitions, which it sees as the only way to sustain high growth in the next few years, chief executive Heinz Krogner said.

"We are looking for high-end brand names with a good reputation. We will not set an investment ceiling for our acquisition targets," he said.

Krogner said it was hard to depend on just one brand when attempting to deliver 20 percent annual growth in turnover.

"Acquisitions, rather than a greenfield project in some developed market, could be necessary for the company to sustain high growth in the future."

Analysts have mixed feelings about this strategy, however.

"Esprit has not relied on acquisitions to drive growth in the past," said one retail analyst who declined to be named. "It's hard to predict the synergy effect from these upcoming acquisitions."

Krogner said enhancing its brand could make the company more competitive globally. "A well-known brand could provide us with chances to launch more product ranges, not only in garments."

Until new acquisitions are made, however, Esprit will continue to depend on organic growth. The drivers could be mature markets, including Canada, the UK and Italy, which are close to achieving breakeven after around five years of operation.

Esprit reported net profit rose 15.7 percent to HK$1.9 billion in the first half ended December. Total sales gained 13.1 percent to HK$11.8 billion, despite a 5 percent depreciation of the euro over the period.

Esprit derives 85 percent of its turnover from Europe, 12 percent from Asia-Pacific and 3 percent from North America.

In local-currency terms, stripping out conversion effects, Esprit's sales rose 18 percent. At the start of last year, the company had set itself a target of a 20 percent rise.

"We are happy with the results. Some of our markets are performing better than expected, especially Singapore and Malaysia," deputy chairman John Poon said.

Italy was Esprit's star performer. Sales in that country rose 59 percent in the first half.

"In the medium term, India will be outperform. We are keen on developing this market," Poon said.

Hong Kong turnover jumped more than 9 percent. The company plans to favor smaller outlets - 5,000 to 10,000 square feet - over large stores in future.

"Local consumers prefer to shop in a compact store," Poon said.

Esprit plans capital expenditure of at most HK$1 billion this year, versus last year's HK$1.2 billion.

The company will distribute 50 HK cents per share as an interim dividend, payable April 7.

"There is no change to our dividend policy. We are comfortable with a 40 percent regular dividend payout ratio," Poon said.

Lifestyle ditches Tsuen Wan Sogo plan after lease row
Prudence Ho
Hong Kong Standard
Wednesday, March 01, 2006

Lifestyle International Holdings, which runs department stores in Hong Kong and the mainland, has scrapped plans to open its third Sogo store in Tsuen Wan after failing to agree lease terms.

Lifestyle started lease negotiations for opening its third Sogo store at Nina Tower with Chinachem Group last year. The company, which runs Sogo stores in Causeway Bay and Tsim Sha Tsui, said it will keep looking for a suitable location.

"When we open a new store, the lease period can't be too short and floorspace can't be too small," Lifestyle's managing director Thomas Lau said in a media briefing Tuesday.

Lifestyle reported Tuesday net profit of HK$539 million for 2005, up 30 percent from a year ago, and beat market expectations of HK$504 million. Sales rose 30 percent to HK$2.1 billion.

The earnings growth was mainly driven by its Sogo flagship store in Causeway Bay, which boosted sales 7.9 percent in 2005. The store posted 6 to 7 percent sales growth for the first two months of this year.

Lau said the newly opened Sogo store in Tsim Sha Tsui, which recorded three-month sales of HK$65 million for 2005, is expected to take two to three years to offer a more "meaningful contribution" to the company.

Lifestyle said it expects a drive in growth to come from Jiuguang store in Shanghai, which opened in September 2004 and reported losses of HK$41 million last year. The company expects the Shanghai store to break even this year and become a significant earnings contributor after 2007.

Lau said Lifestyle plans to buy the remaining 35 percent stake in Jiuguang store and a 50 percent interest in the property housing it from its partner.

The company also hopes to find prime locations in cities such as Beijing, Shanghai and Tianjin, to open its second Jiuguang store.

Lifestyle had HK$2.5 billion in cash at the end of December 2005, and Lau said the company could borrow HK$1 billion from the banks to give it enough funds to invest stores in Hong Kong and the mainland.

Lifestyle declared a final dividend of 14.4 HK cents per share, and a special dividend of 3.6 HK cents to celebrate the 20th anniversary of Sogo in Hong Kong.

Lunar New Year boosts retail sales
Prudence Ho
Hong Kong Standard
Friday, March 03, 2006

Hong Kong retail sales, which have increased monthly for more than two years, grew at a faster pace in January, though the figures were distorted by the timing of the Lunar New Year.

Sales value rose 11.6 percent from a year earlier to HK$21.2 billion, compared with a 6.8 percent increase in December 2005, the Census and Statistics Department said Thursday.

A government spokesman attributed the growth surge in January sales to distortion caused by the timing of the Lunar New Year, which fell in January this year but February last year.

However, stronger consumer confidence, allied to higher wages and an improved unemployment rate, also contributed, according to Citigroup senior economist Joe Lo.

February retail sales will show double-digit growth, on good consumer sentiment and low base in the same month a year earlier, DBS Deposit & Investment senior investment strategist Daniel Chan said.

Alcoholic drinks and tobacco recorded the biggest growth in January, surging 28.2 percent, followed by footwear, allied products and other clothing accessories, which gained 21.7 percent. Supermarket sales rose 20.1 percent and fuel sales 19.9 percent.

High visitor figures in January supported the tourist-related retail business such as electrical goods and photographic equipment, which posted 12.9 percent growth from a year earlier. Jewelry, watches and clocks, and valuable gifts gained 7.7 percent.

January visitor numbers reached 2.18 million, 15.6 percent higher than the same month last year and double- digit growth since last April.

On the other hand, rising interest rates hampered some retailers - motor vehicle and auto parts business was down 3.8 percent in January.

"Most people use installment payment to purchase cars, so the rising interest rate environment has a negative impact on auto sales," Lo said.

Economists surveyed by Reuters had forecast an 8.4 percent gain in January sales value.

Mannings to augment mainland store network
Dairy Farm also plans expansion of branches in Hong Kong and Macau
8 March 2006
South China Morning Post

Hong Kong's largest drug-store chain Mannings plans to expand its mainland operations by opening as many as 10 stores this year, despite the closure of an underperforming branch in Guangzhou.

The retail arm of Singapore-listed Dairy Farm International Holdings also plans to add between 10 and 15 stores to its portfolio of 224 stores in Hong Kong and a further four to the three it has in Macau.

Dairy Farm group health and beauty director Caroline Mak said the company was still exploring the mainland market, where it has 11 stores in Guangzhou, Dongguan and Shenzhen.

"We will spend heavily on expanding our network in the mainland once we finish our exploration," said Ms Mak, who expects research on the mainland market to finish at the end of the year.

She said early studies indicated that mainland customers were more sensitive to price and to the style of promotion.

"In Hong Kong, we advertise on television. But in the mainland, it doesn't work because the audience won't travel from one city to another just to visit our stores. We mainly distribute flyers for promotion," she said.

Mannings entered the mainland market in 2004 under the Closer Economic Partnership Arrangement, but restrictions under the agreement meant that expansion by the company had to be confined to the Pearl River Delta. Ms Mak said the Guangzhou store was closed after sales performed "far below expectations", a situation she put down to a lack of population traffic in the area.

She said it would take between seven and eight years for a new mainland store to break even.

Apart from southern China, the Dairy Farm group also operates health and beauty stores under a different brand name in other Asian countries. The segment accounted for 15 per cent of the group's total revenue and about 23 per cent of operating profit last year.

The company, which has undergone rental increases this year, aims to reduce operating costs by spending slightly less on promotions and maintaining, rather than aggressively expanding, market share.

Lily Chan, chief executive of Mannings (Hong Kong and Macau), said: "We will continue to keep our product prices low. We aim to boost our sales for profit growth."

Ms Chan added that Mannings' product prices had dropped 2.4 per cent last year even though Hong Kong's inflation rate was below 1.1 per cent.

Dairy Farm operates retail chains Wellcome, Ikea and 7-Eleven in addition to Mannings and holds 50 per cent stakes in Maxim's and Starbucks in Hong Kong.

Dickson plans Seibu store in Kowloon Hotel
21 March 2006
South China Morning Post

Luxury retailer Dickson Concepts (International) will invest $80 million in another Seibu store in Kowloon despite business slowing in the past two months.

Chairman Dickson Poon said yesterday the company had signed an agreement to lease a 52,000 square foot area in the shopping arcade of Kowloon Hotel in Tsim Sha Tsui.

Mr Poon said although buying sentiment had been dampened by the uncertainty over interest rate rises and the fluctuating property and stock markets, he was confident the new store would make a profit in its first year of operation.

"We're positive about the retail market in the long term our Seibu store at Langham Place attained profit within a year of operation," he said.

The store will occupy almost all four storeys of the arcade and will open in December, about two years after the 20,000 sqft Seibu store in Langham Place in Mongkok.

Asked if the company was shifting its focus from Hong Kong Island where it has only one Seibu store, Mr Poon said: "It's difficult to find such large prime sites, whether they are in Kowloon or Hong Kong. So we have to go to different districts to look for suitable locations."

Dickson Concepts said the leasing agreement granted it an option to take up an additional 17,000 sqft of space in 2009, but refused to disclose further details.

Property agents said the rental was about $4 million per month and the lease was for six years.

"The reason the company chose this location is because it's bullish about the tourism industry, as well as the retail market in Tsim Sha Tsui - where [rival] Lane Crawford has a store nearby," one property agent explained.

Rental income of the whole shopping arcade was estimated at $2 million when Cheung Kong (Holdings) and Hutchison Whampoa bought the four-star hotel complex in 2004.

Dickson Concepts will also open a 100,000 sqft Seibu store in Chengdu, Sichuan province, next month and a 145,000 sqft Seibu in Shenyang, Liaoning province, this year.

With a net cash reserve of more than $400 million, the retailer expects to have opened 75 shops under various brand names by the end of the financial year, for more than 400 shops throughout East Asia.

Mr Poon said the company's retail business in Taiwan had also slowed in the past two months, due to a tightening of credit limits by leading banks on credit cards.

Clothing retailer Giordano International says 2005 net profit rose 4.9 percent on year
21 March 2006

HONG KONG (AP) - Clothing retailer Giordano International Ltd. said Tuesday its net profit in 2005 rose 4.9 percent from a year earlier.

Hong Kong-listed Giordano said its net profit last year was HK$406 million (US$52.32 million, euro42.98 million), up from HK$387 million the previous year.

The company, which sells casual wear in Hong Kong, China, Taiwan, Singapore, South Korea, and the Middle East, didn't give reasons for its earnings results.

Giordano said revenue in 2005 rose 10.25 percent to HK$4.41 billion (US$568 million, euro466.57 million) from HK$4.0 billion the previous year.

Spotlight takes on rival in MegaBox complex Australian firm caters to women while B&Q Asia offers men's DIY products
30 March 2006
South China Morning Post

Australia's leading home improvement retailer, Spotlight, says it does not fear head-on competition with European do-it-yourself giant B&Q Asia, even though both will open their first Hong Kong stores in the same Kowloon Bay shopping centre next year.

Instead, Spotlight sees B&Q Asia as a partner that can complement each other in Kerry Properties' MegaBox development because their product ranges are different.

Spotlight aims to open up to six stores in Hong Kong and break into the mainland and Taiwan markets, according to managing director Morry Fraid, but there are no timetables for the expansions.

Mr Fraid said his company had been on the lookout for a location for its first Hong Kong stores for six years before finally deciding on MegaBox.

"We specialise in do-it-yourself products for females such as textiles and sewing equipment while B&Q focus more on male products like electronic drills," he said. "We will complement each other."

Spotlight has leased 40,000 square feet of retail space in MegaBox for 10 years. Initial investment will amount to $25 million. It will include such products as fabrics, needles, cups, saucers, handicrafts and home-interior goods.

Mr Fraid expected the project would break even in two years and to recoup the investment in three years.

B&Q Asia has leased 120,000 square feet for 10 years with an investment of $200 million. The company has said it would take 18 months for the store to break even.

Mr Fraid said the shopping centre would be ideal for couples looking for home improvement products; the men would go to B&Q while the women would visit Spotlight.

MegaBox executive director Tom Tong Kwan-ki said the shopping centre would become a hub for home stores.

He said that large home stores preferred to open outlets in MegaBox because it was the only venue in Hong Kong that could provide large spaces at a "reasonable" rent. Mr Tong said the rent for Spotlight was less than $30 per square foot.

But analysts have warned that the concept of do-it-yourself would not work in Hong Kong because homeowners in general did not have the time, skill or inclination to do their own renovations.

Mr Fraid said the Hong Kong store would require 120 employees. Product prices would be at least 10 per cent lower than those at local small stores, he added.

Spotlight operates 105 stores in Australia, New Zealand and Singapore.

Mr Fraid said the good performance of its Singapore stores showed potential for the company's expansion in Asia. He said Shanghai and Guangzhou would be preferable locations for its mainland entry.

Spotlight announces first Hong Kong store opening in 2007
Wednesday, March 29, 2006
Government Press Release

Spotlight, one of the largest chains of fabric, craft and home interiors superstores, announced today (March 29) the opening of a 40,000 square feet store in Hong Kong in early 2007 which will create at least 120 immediate new jobs. This will be Spotlight's first investment in Greater China, to be followed by a mid-term plan to open more stores in the region.

Located in the MegaBox mall of Enterprise Square Five in Kowloon Bay, the new Spotlight store will stock Hong Kong's largest range of fabrics, handicrafts and home interior products for do-it-yourself customers. A signing ceremony was held to signify the co-operation between Spotlight and MegaBox Development Co Limited, a subsidiary of Kerry Properties Limited.

"We wanted to bring Spotlight to Hong Kong, as you have one of the best and most dynamic markets in the world," said the Director and co-owner of Spotlight, Mr Morry Fraid. "Targeted to the local Hong Kong market, the Spotlight MegaBox store will bring a new kind of shopping experience to local consumers. We are absolutely confident about the substantial investment we are making here. You have an exciting, fast-paced economy, and our products are well suited to your market."

"The Spotlight MegaBox store will be fully staffed by local employees – as are all our stores. We are very excited to be creating more than 120 new jobs for our Hong Kong team at MegaBox. Since our people are always the most important asset to the company, we are committed to providing training to transfer our industry knowledge to the Hong Kong team."

The new store will comprise six broad categories, each of which is a mega unit by itself within the store. They include: Home Furnishings, Manchester (bed linen), Home Decor, Dress and Fashion fabrics, Craft, and Spartys (party supplies).

The Executive Director & General Manager of MegaBox Development Co Limited, Mr Tom Tong said, "We are delighted to welcome Spotlight to the MegaBox family, a move which will help speed up the development of a home-improvement retail cluster at MegaBox by providing customers with a wide choice of the world's top DIY products. DIY home improvement is a major component in MegaBox's development as the ultimate lifestyle destination in East Kowloon.

Mr Morry Fraid also pointed out that the set up in Hong Kong represents an important step towards entering the Greater China market. The company plans to open up to six stores in Hong Kong, and will look into further opportunities in Mainland China and Taiwan.

The Associate Director-General of Investment Promotion at Invest Hong Kong, Mr Simon Galpin, welcomed Spotlight's decision to invest in Hong Kong. He said, "We are delighted to hear that Spotlight has chosen Hong Kong as its strategic market. This shows not only the company's confidence in our local consumer market, but also its recognition of Hong Kong's strategic position as a gateway to the mainland of China and other markets in the region."

"We are also pleased to hear that the company has a strong commitment to staff localisation and training. The industry knowledge, expertise, new concepts and services brought into Hong Kong by companies like Spotlight will complement and strengthen the existing cluster in the home interior products and services industries. This will help develop the untapped potential in the market."

The first Spotlight store was opened in 1973 in Melbourne, Australia. Today, there are 105 Spotlight stores throughout Singapore, Australia and New Zealand, occupying over 3 million square feet of retail space. The company employs about 6,500 people worldwide. Sales have grown to more than A$650 million per annum, almost doubling over the last five years. For more information, please visit its website at www.spotlight.hk.

Invest Hong Kong is the Hong Kong Special Administrative Region Government department charged with promoting and facilitating inward investment into the city by providing foreign companies with a wide range of services free of charge and support needed to establish a business presence here. For more information, please visit the website at www.investhk.gov.hk.

Provisional Statistics of Retail Sales for February 2006
Government Press Release

The Census and Statistics Department (C&SD) released the latest figures on retail sales today (March 31).

2. The value of total retail sales in February 2006, provisionally estimated at $16.2 billion, decreased by 3.1% compared with a year earlier. After netting out the effect of price changes over the same period, the volume of total retail sales decreased by 4.9% in February 2006 compared with a year earlier.

3. The revised estimate of the value of total retail sales in January 2006, at $21.2 billion, increased by 11.6% over January 2005, while the volume of total retail sales increased by 10.4%.

4. In interpreting these figures, it should be noted that, affected by the difference in timing of the Lunar New Year, retail sales tend to show greater volatility in the first two months of a year. The Lunar New Year fell on 29 January this year but on 9 February last year. It is therefore more appropriate to compare the retail sales figures for January and February taken together.

5. Taking the first two months of 2006 together, total retail sales increased by 4.7% in value or 3.2% in volume over the same period a year earlier.

6. Analysed by type of retail outlet and comparing January and February 2006 combined with a year earlier, the volume of sales of miscellaneous consumer durable goods increased the most, by 8.9%. This was followed by sales of footwear, allied products and other clothing accessories (+8.8% in volume); motor vehicles and parts (+8.5%); fuels (+7.3%); miscellaneous consumer goods (+6.9%); commodities in supermarkets (+3.9%); electrical goods and photographic equipment (+3.9%); wearing apparel (+3.0%); commodities in department stores (+2.5%); food, alcoholic drinks and tobacco (+1.2%); and furniture and fixtures (+0.4%).

7. On the other hand, the volume of sales of jewellery, watches and clocks, and valuable gifts decreased by 7.1% in January and February 2006 combined compared with a year earlier.

8. Based on the seasonally adjusted series, the volume of total retail sales increased by 1.2% in the three months ending February 2006 compared with the preceding three-month period.

9. These retail sales statistics are primarily intended to measure the sales receipts of goods sold by local retail establishments, for gauging the short-term business performance of the local retail sector. They cover consumer spending on goods but not on services. Moreover, they include spending on goods by visitors in Hong Kong but not by Hong Kong residents outside Hong Kong. Hence they should not be regarded as a comprehensive indicator of overall consumer spending. In this context, it may be noted that the share of consumer spending on services in overall consumer spending has been increasing over time.

10. Users interested in the trend of overall consumer spending should refer to the quarterly series of private consumption expenditure (PCE), which is a major component of the Gross Domestic Product. Compiled from a wide range of data sources, PCE covers consumer spending on both goods (purchased from all channels) and services by Hong Kong residents whether domestically or abroad.

Commentary

11. A Government Secretariat spokesman pointed out that the overall volume of retail sales grew steadily further in the first two months of 2006 over a year earlier, indicating that consumer spending has stayed rather firm despite the successive interest rate hikes. Looking ahead, the sanguine economic outlook, increase in labour income as well as further expansion of inbound tourism should continue to render support to local retail business in the near term.

Further information
Tables : http://gia.info.gov.hk/general/200603/31/P200603310123_0123_12433.pdf

12. The volume of retail sales is derived from the value of retail sales after adjusting for price changes. The relevant components of the Consumer Price Index are used as deflators.

13. Table 1 presents the revised figures on value index and value of retail sales for all retail outlets and by type of retail outlet for January 2006 and the provisional figures for February 2006, with average retail sales from October 1999 to September 2000 taken as 100.

14. Table 2 presents the revised figures on volume index of retail sales for all retail outlets and by type of retail outlet for January 2006 and the provisional figures for February 2006, with average retail sales from October 1999 to September 2000 taken as 100.

15. Table 3 shows the movement of the volume of total retail sales in terms of the year-on-year rate of change for a month compared with the same month in the preceding year based on the original series, and in terms of the rate of change for a three-month period compared with the preceding three-month period based on the seasonally adjusted series.

ANALYSIS-Overlooked HK retail stocks look like bargains
By Sophie Taylor and David Dolan

HONG KONG/TOKYO, April 5 (Reuters) - Investors who pushed retail stocks to record highs across north Asia over the past year are now shopping for overlooked bargains in Hong Kong.

Much of the Hong Kong sector languished in 2005 while retailers in Japan and South Korea rallied, including a 75 percent rise in shares of Aeon Co. Ltd. and 56 percent for Shinsegae Co. Ltd. .

Now the city's $26 billion (HK$205 billion) retail market -- expected to grow 8-10 percent a year -- offers affordable plays such as EganaGoldpfeil (Holdings) and Lifestyle International Holdings , analysts and fund managers say.

Despite worries over rising interest rates and slackening Hong Kong tourism, a huge driver of the city's economy, analysts say Hong Kong retail stocks are attractive now because they have a growing exposure to mainland China's $250 billion retail market but remain cheaper than pure Chinese consumer stocks.

"It's a more attractive move to (invest in) Hong Kong companies which have China exposure," said Mohan Singh, head of Asia Consumer Research at BNP Paribas Peregrine, adding that the city's slower-growing retail market means that retail plays are likely to remain cheaper than the mainland's in the near term.

"We believe the run-up has not fully reflected the better growth outlook expected in 2006," he wrote in a report, adding that China-exposed Hong Kong retail firms may see earnings growth of 19 percent, on average, up from 13 percent last year.

Investors are also likely to take heart that Hong Kong retailers' stock valuations are cheaper than their Japanese counterparts.

In Japan, retailers and other stocks closely tied to the country's domestic economy made sharp gains last year as investors were drawn by expectations the world's second largest economy was emerging from years of deflation.

In South Korea, the wholesale and retail sub-index <.KS45> surged 66.9 percent in 2005, outperforming a 54 percent gain in the main KOSPI index <.KS11>. But the South Korean retail sub-index has fallen 0.3 percent so far this year amid worries of slowing consumer demand.

HARD BARGAINS

Analysts say the most attractive stocks are retail companies that have their core business in Hong Kong and are expanding into the China market, because many still trade at lower values than pure China plays.

"In some companies, they have a solid core business and a growing China business, and the market tends to look more favourably at those kinds of companies," Paul McKenzie, head of consumer research at CLSA.

For example, EganaGoldpfeil and Lifestyle International Holdings Ltd., which owns and operates Hong Kong's Sogo department store, trade at about 12.7 times and 17.9 times forward earnings. Two others include goods retailer Dickson Concepts (International) , which has a P/E of 15.7, and Aeon Stores (Hong Kong) , with a ratio of 15.8.

Mainland stocks, by comparison, are among the most expensive in the world, boosted by investors bets that consumption will rise as China tries to shift its export-fuelled economy to one propelled by domestic demand.

China-focused Li Ning Co. Ltd. trades at 36 times and Ports Design Ltd. trades at 28 times.

In Japan, some retailers' price-to-earnings ratios are among the highest in the Tokyo market. Aeon Co. Ltd. has a P/E ratio of about 85, well above the TOPIX's average of around 22, and Seven & I Holdings Co.'s 49.

Market watchers don't expect shares of Japanese retailers to rise much after a 61 percent run-up in Tokyo's retailer index <.IRETL.T> last year, peaking at a 5-½ year high in January.

"Although we are coming out of deflation, it is still going to be difficult for retailers to boost their sales," said Shigemi Nonaka, chairman of Polestar Investment Management.

South Korean retail stocks also saw an aggressive run-up last year but still trade at lower valuations than Japanese plays.

Lotte Shopping Co. Ltd. and Hyundai Department Store Co. Ltd. trade at around 15 and 12 times forward earnings, with Shinsegae Co. Ltd. trading at a multiple of around 16.

"The retail outlook in the country is getting better -- many investors still prefer domestic plays, such as the retail sectors, for their portfolios," said Park Jin, an analyst at Woori Investment and Securities, citing improving consumer confidence and other economic indicators.

Mainland Chinese retailers face stiff competition as they try to expand their share of China's increasingly crowded market.

Companies such as GOME Electrical Appliances Holding Ltd. and Parkson Retail Group Ltd. , which are seeking to broaden their footprint in China's cutthroat and fragmented retail market, trade at 25 times and 38 times forward earnings, roughly double those of global giants Wal-Mart Stores Inc. and Carrefour .

(Additional reporting by Rafael Nam in Seoul)

(US$1=HK$7.8=8.01 yuan)

Japanese fashion accessory retailer opens first overseas outlet in HK
Thursday, April 13, 2006
Government Press Release

http://gia.info.gov.hk/general/200604/13/P200604130106_photo_330916.JPG

http://gia.info.gov.hk/general/200604/13/P200604130106_photo_330947.JPG

Stone Market Co Ltd, a famous Japanese brand which designs, manufactures and sells gem stones, natural stones and silver accessories, officially opened its first retail outlet in Festival Walk, Kowloon Tong today (April 13). It is the retailer's first outlet outside of Japan.

The President of Stone Market Co Ltd, Mr Nakamura Taijiro, said the company was excited about its expansion in Hong Kong. He said, "We have been very successful with our retail business by using Fukuoka as a base to manage the expansion of outlets across Japan. In the same way, we hope to make use of Hong Kong as a strategic base to roll out our expansion plans in Asia."

Mr Nakamura explained why Hong Kong was an ideal choice for Stone Market. "The economic growth of Hong Kong is remarkable and is catching up with Japan. The consumer market is very robust. As most of our products are unisex accessories catering for all generations, we foresee a huge potential in the local retail market. Moreover, Hong Kong's geographical convenience and our established network here are major reasons for our decision to choose Hong Kong to open our first store outside of Japan."

Mr Nakamura said that the company planned to open two more retail outlets in Hong Kong this year.

Stone Market strives to stay abreast of the latest global fashion trends and has been importing popular merchandise and natural stones through various sources around the world. This strategy enables the company to respond swiftly to the fast-changing needs of today's sophisticated customers.

At present, the company' executives visit Hong Kong frequently, about once every two months, for product procurement. The establishment of an office here could enhance efficiency and regional coordination.

The Associate Director-General of Investment Promotion at Invest Hong Kong, Mr Mark Michelson, paid a courtesy visit to Stone Market's first retail outlet in Hong Kong on its opening day. He welcomed Stone Market's arrival in Hong Kong.

Mr Michelson said, "Hong Kong is a retail capital housing the world's premier brands, as well as medium and small-sized retailers. With its central location and huge market comprising locals and tourists, Hong Kong is an ideal 'display window' for retailers to showcase their products to the world and a great springboard to access the Mainland and international markets. Our department has a dedicated team to assist Japanese and other overseas companies in the retail, consumer and sourcing industry to set up shops or procurement offices here. We hope to continue working closely with Stone Market and look forward to its expansion here and regionally in the years to come."

Established in 1994 in Fukuoka, Japan, Stone Market has now expanded to 70 shops nationwide in Japan under the brand names of "Stone Market", "Stylish Stone", "Jouir de Bijou" and "Three Prezzo". It has also achieved the highest sales record in Japan's silver accessory industry. The company's product line-up covers over 30,000 items, ranging from trend-setting to standard designs. For more information, please visit its website at www.stone-m.com.

Sports retailers compete for prime space
19 April 2006
South China Morning Post

Sports shoes and Lycra tops are replacing the latest mobile phones and designer clothes on Hong Kong's high streets as sportswear retailers take up prime store locations at higher rents.

Adidas is in the advanced stages of negotiation for the lease of a 18,733 sq ft space now occupied by HMV at the Sands Building on the corner of Peking Road and Hankow Road, Tsim Sha Tsui, at a monthly rent of about $2 million, according to property agents.

Recently, Nike agreed to pay rent of $1.3 million per month for a 3,000 sq ft store in Central, a testament to its determination to open new stores ahead of the World Cup kick-off in June.

Centaline Property general manager Stanley Poon said more sports brands were looking for retail space in Tsim Sha Tsui, the tourist belt which is undergoing a facelift.

The completion of the proposed redevelopment of the Hyatt Regency Hotel and Tung Ying Building will drive up rents in the future, he said.

"Existing tenants such as telecommunications and fashion chains may be forced to relocate to cheaper areas in the face of rent rises," he said.

Agents said the entry of sportswear retailers into prime locations could put the future of some long-term tenants, such as Watson's at Hai Phong Mansion in Tsim Sha Tsui, in some doubt.

The landlord has been testing the market by offering the space prior to the expiry of Watsons' leasing agreement in September.

The landlord is demanding a monthly rent of $3 million - double the amount the health and beauty chain agreed to pay. Watsons has been leasing the three-level store, with a combined area of 11,800 sq ft, for about 20 years.

Mr Poon said sports retailers were bullish.

"They do not mind soaring rents, it is a tiny portion of their annual budget for expansion," he said.

Last Japanese department store in Hong Kong to close

TOKYO, April 23, 2006 (AFP) - The last Japanese department store in Hong Kong, owned by operator Mitsukoshi Ltd., is to close in September, a newspaper said Sunday.

After the planned closure, all Japanese department store operators will have pulled out of Hong Kong, the Nihon Keizai Shimbun said.

Mitsukoshi Hong Kong, which opened in 1981, reported sales of 7.7 billion yen (15 million dollars) for the year to February 2006, accounting for some 40 percent of sales at the Japanese company's overseas outlets.

Mitsukoshi was planning to move its last Hong Kong store to another location in the city but decided that the price of real estate was too high, the business daily said.

Japanese department stores such as Mitsukoshi, Daimaru, Matsuzakaya, opened stores in Hong Kong and other countries in Japan's booming 1980s.

But as domestic business went into decline following the burst of the nation's bubble economy in the early 1990s, the companies began to rapidly contract their businesses overseas.

Sogo and Seibu, now controlled by their holding company, Millennium Retailing, have also withdrawn from Hong Kong, but have allowed local retailers to use the names.

The imminent closures of Seibu and Mitsukoshi in Causeway Bay are likely to benefit Sogo
27 April 2006
South China Morning Post

The imminent closures of Seibu and Mitsukoshi in Causeway Bay are likely to benefit Sogo, the last Japanese-brand complex in the district owned by Lifestyle International Holdings.

DTZ Debenham Tie Leung retail director Lawrence Heung said yesterday that less retail space in prime commercial complexes in Causeway Bay would be good news for landlords such as Lifestyle.

But Lifestyle managing director Thomas Lau Luen-hung (centre) said Sogo's leasing department had already generated a long waiting list.

Mitsukoshi is being forced to close as its landlord is to redevelop the building into a 45-storey office-retail complex.

Seibu's ground floor is being subdivided in a move expected to triple its landlord's rental income.

Jewellery chain to open more stores - Hang Fung cashes in on mainland levy on imported watches
27 April 2006
South China Morning Post

Jewellery retailer Hang Fung Gold Technology plans to open watch shops in Hong Kong next year in the hope of cashing in on an expected surge in mainland customers following the introduction of a levy on imported watches in China.

Chairman Lam Sai-wing said the company, which already sells Swiss and self-branded watches at its eight Hong Kong jewellery shops, won agency licences for two more Swiss watch brands recently.

Citing the introduction of a 20 per cent levy on watches in China this month, Dr Lam said he expected more mainland customers to come to Hong Kong to buy watches. The same levy will also be charged on all products that are priced at more than 10,000 yuan.

Dr Lam noted that in Hong Kong, the gross margin for retail jewellery was about 10 per cent, compared with 20 per cent to 30 per cent for watches. While the prices of watches at Hang Fung outlets ranged from $2,000 to $100,000 each, those at the $2,000 to $3,000 range were the most popular among mainland buyers, he added.

Dr Lam said the company aimed to have watches account for 10 per cent of its revenue next year, up from 3 per cent. This could be done by opening its own chain of stores for watches in Hong Kong or forming joint ventures with local watch retailers.

"Watches will be a key growth driver for us," he said.

Dr Lam expects watch sales of between $8 million and $9 million during the week-long Labour Day holiday in the mainland next month.

He said 500 mainland travel groups a day were scheduled to visit their Hong Kong outlets during the Labour Day week, a year-on-year increase of 20 per cent. He said Easter sales were up 10 per cent year on year.

Dr Lam expects gold prices, currently at about US$630 an ounce, to reach US$700 by year-end.

"We are making more hollow gold products with a thin gold layer on top because these products are now popular," he said, adding that Hang Fung had an adequate gold bank.

Meanwhile, the firm will scale down the expansion of its Gold Tourism Exhibition Hall in Hunghom as the expected flow of tourists on side-visits from Hong Kong Disneyland had fallen short of its projection.

The firm had planned to expand the 110,000 square foot hall by 30,000 sq ft to match the expected surge of tourists following the opening of Disneyland last year.

Dr Lam said the firm may expand the hall in July instead.

Retailer looks for local staff
Hennes & Mauritz is on a global expansion drive and is preparing to raise its profile in Hong Kong
29 April 2006
South China Morning Post

SWEDISH FASHION retailing giant Hennes & Mauritz (H&M) is on the march in Asia. Perhaps best known in the high streets and department stores of Europe, the company is set to raise its profile in Hong Kong. The move is part of a global promotion and expansion campaign, which saw the opening of 145 new stores last year.

"H&M is expanding rapidly and, as we are aiming for worldwide growth, those plans also include Hong Kong," said Eva Berg, Hong Kong production office manager at H&M.

"We have a staff of 78 and are looking to grow to more than 90 in the next two or three months, [which is] quite an aggressive expansion target," she said.

The target partly reflects a globally positive retailing trend, but is also in line with H&M's corporate drive and initiative.

"It's true that the fashion retailing industry is doing well, but at H&M we are our own strongest competition. We are constantly looking at what we do and how we can improve, and that goes some way in explaining why the company continues to be so successful," Ms Berg said.

Integral to the company's success is a spirit of openness and communication, which pervades all sections of the organisation, and it is essential that employees have the qualities to match. In every position, new staff have to fit the company mould.

"We are looking for people whose talents reflect our company values, such as common sense, teamwork, initiative and good communication skills. Also very important is what we call 'believing in people', which seeks to establish a sense of trust and support between company and staff. We expect new staff to embrace this ideal," said Jimmy Lau, H&M's human resources manager in Hong Kong.

"Our people also need to be open to change. Fashion is changing all the time, so we need to change with it. This requires an ability to accept occasional variations in the workplace, such as with team members, standards, routines and the tools you are working with," he said.

The only new vacancy at the H&M Hong Kong office is for a sourcing manager. The other available posts are vacancies caused by the need for replacements or the expansion of existing roles. Jobs include those of merchandisers, technicians and research and development people for the cosmetics, underwear and accessories departments.

Relevant work experience is important, though it is second to candidates matching company values. It also varies depending on the position - three years of relevant experience is preferred for positions in accessories, underwear and cosmetics, while only a year is required for a lab technician.

An educational background in textiles or a similar field is also advantageous. An academic specialisation in any of the skills needed for the job will be an asset.

Mr Lau believes that one of the main attractions of working for H&M is the company atmosphere.

"There is a culture at H&M which staff enjoy. This includes a sense of freedom and responsibility, and also open, direct communication. It is also a fast-paced and driven working environment. If you are the right person, these factors combine to make a very attractive working environment," he said.

There is also the prospect of promotion and opportunities to expand individual skills and experience. Rather than being dependent on a complex framework, promotion is determined by discussion and the development of personal values.

"We don't have a clearly defined career path for each employee - we prefer to have frequent dialogue and feedback with individuals in order to gauge the best possibilities for their movement within the company. We like to focus on the talents that individuals possess and reward those talents - for example, it's not necessary to have worked in any one position for a long time to get promoted," Mr Lau said.

Ms Berg said the door to promotion was always open for people who blended well with the values of the company and people could take responsibility and initiative.

As with any major international organisation, there is also the potential for gaining work experience overseas. H&M employs more than 50,000 people worldwide, with nearly 1,200 stores in 22 countries.

Retail sales rebound in 9pc jump
Hong Kong Standard
Wednesday, May 03, 2006

Retail sales increased 9 percent in March from the same month a year ago as demand rebounded from a Lunar New Year-induced drop in February.

The figure reported by the Census and Statistics Department was nearly double the average estimate of 4.7 percent among 17 analysts polled by Bloomberg. Sales amounted to HK$17.9 billion, compared with HK$16.4 billion a year ago.

"Consumers have more buying power due to the continued fall in unemployment, as well as higher wages," said DBS Group senior investment strategist Daniel Chan.

In February, retail sales fell 3.2 percent from last year as the Lunar New Year fell in January this year, which was earlier than expected, compared with February last year. The decline was the first in more than 2 years.

March's strong result was also partly due to seasonal factors, Chan said. "Last year's total was probably slightly lower than usual because the Easter holidays were in March whereas this year they were in April," he said.

Sales of motor vehicles and parts registered the strongest growth among all product categories, increasing 27.9 percent, followed by sales of supermarket commodities, which grew 15.6 percent, the government said.

"We have seen strong growth from items most likely consumed by local residents rather than tourists," a report by investment bank Goldman Sachs said. "We expect domestic consumers to contribute more going forward."

"The continued improvement in the local job market has underpinned the growth in retail sales," said Chan. "We expect growth will continue as interest rates peak in the second half of the year."

The Monetary Authority, the de facto central bank, has increased interest rates 15 times since 2004 to track rate movements in the United States, driving up borrowing costs and mortgage payments. However, the cycle of rate increases is expected to end in the second half.

The growth in retail sales is not translating into upward pressure on the inflation rate.

"Retail sales growth is mainly driven by higher volumes, and the pricing power of retailers remains quite limited because of competition," said Core Pacific-Yamaichi International senior economist Kent Yau.

The consumer price index rose 1.8 percent in March, accelerating slightly from 1.6 percent in February, according to data released earlier by the government.

"The increase in inflation is mainly due to price rises in cost-driven goods such as petrol and jewelry," Yau said.

Hong Kong's Retail Sales Growth Likely Slowed to 7.4% in April

June 1 (Bloomberg) -- Hong Kong's retail sales probably grew at a slower pace in April as local residents traveled abroad for Easter holiday.

Sales likely rose 7.4 percent from a year earlier after jumping 9 percent in March, according to the median forecast of 18 economists surveyed by Bloomberg News. The government will release figures at 4:15 p.m. local time today.

The forecast gain is bigger than the 6.1 percent average monthly increase over the past year. Hong Kong's consumers are spending more, emboldened by rising stocks and property prices and a falling jobless rate that's pushed up wages. Tourists are arriving in record numbers as the city opens new attractions.

``With falling unemployment and large wage increases, consumer confidence should remain high and translate into solid spending in the coming months,'' said Paul Tang, an economist at Bank of East Asia in Hong Kong.

By volume, retail sales probably rose 6 percent in April from a year earlier after gaining 7.7 percent in March, the survey showed. Easter fell in April this year and in March in 2005.

The $178 billion economy expanded 8.2 percent in the first quarter from a year earlier, a bigger-than-expected gain that prompted economists at Goldman Sachs, JPMorgan Chase and Credit Suisse to raise full-year growth forecast. Domestic demand is increasingly driving growth, a May 23 government report said.

Tourist Attractions

Unemployment in the city of 6.9 million fell to 5.1 percent in April, the lowest in almost five years, as the expanding economy caused businesses to expand. The jobless rate stood at 6.6 percent at the beginning of 2005.

Hong Kong's retailers are also counting on new attractions such as Walt Disney Co.'s Disneyland theme park to keep luring tourists to the city. Retail sales have gained almost every month since July 2003, when China eased visa rules for mainland travelers who visit Hong Kong.

Tourist arrivals increased 9.5 percent in April from a year earlier to 2.1 million, a record for the month. Mainland travelers accounted for more than half of visitors, the Hong Kong Tourism Board said May 26. The tourism body forecasts a record 27 million visitors for this year.

The following table shows economists' forecasts for percentage changes in Hong Kong's retail sales in April from a year earlier.

-----------------------------------------
Value Volume
-----------------------------------------
Median 7.4 6.0
Average 7.1 6.0
High 9.4 8.8
Low 3.3 2.9
Forecasts 18 19
-----------------------------------------
Action Economics 7.5 6.5
Bank of East Asia 8.0 7.0
CIMB GK Securities 8.8 8.8
Capital Economics 5.0 3.5
Citigroup 5.0 4.0
Core Pacific-Yamaichi 6.6 5.4
Credit Suisse 6.4 5.1
DBS Bank 6.5 5.5
Deutsche Bank 9.4 8.0
Forecast 3.3 2.9
HSBC 8.7 7.5
Hang Seng Bank 5.0 4.0
ING Bank 7.2 6.0
Ideaglobal 8.0 7.0
JPMorgan Chase n/a 5.8
Lehman Brothers 7.0 6.0
Societe Generale 9.0 7.0
Standard Chartered Bank 8.0 7.0
UBS Securities 8.5 7.5
-----------------------------------------

Cars and clothes spree lifts grow thin
HK retail sales 9.4pc rise in consumer spending linked to buoyant economy
2 June 2006
South China Morning Post

Shoppers splashed out on cars, clothing and other consumer goods in April, pushing retail sales up a higher-than-expected 9.4 per cent year on year, to $18.6 billion, the government said.

The result far exceeded the consensus estimate of 7.4 per cent and was an improvement on the 9 per cent growth recorded in March.

The figure took the rise in the value of retail sales in the first four months of the year to 6.9 per cent compared with the same period a year ago.

A government spokesman said retail sales and consumer spending were so buoyant because of the Hong Kong economy's robust growth - as seen in higher salaries, an increase in job opportunities and rising household wealth.

"Although the economic outlook is somewhat clouded by the range of uncertainties in the external environment and increased volatility in the financial markets, improving incomes and further expansion of inbound tourism should continue to support local retail business," the spokesman said.

According to Census and Statistics Department data, vehicle sales increased the most by volume in April, up 15 per cent, followed by department store purchases, which rose 14.4 per cent.

Sales of footwear and other accessories rose by 13.1 per cent, and sales of furniture and fixtures grew 12.2 per cent year on year.

Jewellery, watch and clock sales were down 4.2 per cent from a year earlier, having been up 0.8 per cent in March.

Hong Kong Retail Management Association chairman Bankee Kwan Pak-hoo said he remained cautiously optimistic about the retail outlook, though sales might be hit this month as soccer fans stayed at home to watch the World Cup finals.

Retail sales during the World Cup in June 1998 dropped more than 16 per cent. During the finals in 2002, sales dropped 8 per cent.

"I don't think this year retail sales will be negative during the World Cup, but they will probably only rise by single digits," Mr Kwan said.

"Food and beverage outlets will likely benefit, as well as supermarkets as people stock up on drinks and snacks. But the impact will be negative for restaurants. Sales may also shrink for stores selling fashion and apparel."

Standard Chartered Bank economist Tai Hui said the fact that Easter fell in April this year may have been a factor in the rise in spending, even though it brought no influx of mainland tourists.

"It's not exactly a holiday in China, but May will be interesting given the 'golden week' holiday," Mr Hui said. "Retailers are under pressure not to raise prices. This is a competitive environment."

The bank is still sticking to its 6 per cent forecast for economic growth this year, although with the various economic indicators showing strength, Mr Hui said the target could be conservative.

Taiwan brand sees tremendous potential in Hong Kong retail market
Monday, June 26, 2006
Government Press Release

Taiwan lingerie manufacturer and retailer, Sincerity Foundation Manufacturing Co Ltd, expressed strong optimism about prospects for its business in the Hong Kong retail market.

The company opened its regional office and three retail outlets in Hong Kong under the brand of Easy Shop during the first half of 2006. Those stores are located on the street level of Yau Ma Tei, Mongkok and Wan Chai, and each has a floor area of 2,000-3,000 square feet.

At the grand opening of the third Easy Shop retail outlet in Wan Chai today (June 26), the Managing Director of Sincerity Foundation Manufacturing Co Ltd, Mr Mingtung Lee, said, "We are excited about our entrance into Hong Kong, the famous fashion capital of Asia. The high concentration of international brands, high spending power of local consumers and tourists, as well as the lifestyles of Hong Kong people, have created an ideal business environment for retailers like us.

"Easy Shop is the only female concept store in Asia, which takes care of both females' inner and external beauty by offering products ranging from international lingerie, accessories and cosmetics to skincare. The luxurious use of space and vivid orange decorations create a fabulous shopping atmosphere for our customers. With our unique positioning and the strong demand for female beauty products, we are confident that our brand and products will be well received in Hong Kong.

"We are very optimistic about the long-term development of the Hong Kong retail market. In view of the tremendous potential for consumer products in Hong Kong, we will further expand our retail network within 2006 and in the next two years," he said.

The Associate Director-General of Investment Promotion at Invest Hong Kong, Mr Simon Galpin, warmly welcomed the company's investment in Hong Kong. He said, "We are delighted to see the arrival of another leading consumer brand in Hong Kong. The establishment of Easy Shop's retail network in our city will further enrich our versatile consumer market, and at the same time, create job opportunities for local people.

"We are also particularly pleased that Easy Shop plans to grow even more in our city, demonstrating confidence in our retail market and its future prospects. We wish Easy Shop every success in Hong Kong."

Since the first Easy Shop opened in Taiwan in 2000, the company has opened over 250 shops worldwide with over 1.5 million member customers. For further information, please visit the website at www.easyshoptw.com.

APM sparks rush for midnight malls
28 June 2006
South China Morning Post

The success of the APM mall in Kwun Tong has spurred Sun Hung Kai Properties to lengthen the opening hours of its shopping centre in Causeway Bay.

Sino Land has also announced a similar move for its shopping centre in Tsim Sha Tsui.

On the leasing contracts, SHKP stipulates that shops at APM must be open until midnight, making it the first midnight shopping centre in Hong Kong.

The mall has become one of the more popular shopping centres in the city since it opened last year.

Encouraged by the successful experience of APM, the developer plans to extend the opening hours of its World Trade Centre shopping centre in Causeway Bay from 11pm to 3am.

"Causeway Bay is one of favourite shopping districts in Hong Kong and welcomed by young consumers. One of our anchor tenants is the game centre, which helps attract young shoppers," said Fiona Chung Sau-lin, deputy general manager of the leasing department at Sun Hung Kai Real Estate Agency.

"We see the potential of developing a midnight mall in Causeway Bay. We will attract consumers to stay and spend until late at night with the introduction of karaoke, bars and clubs in World Trade Centre."

Sino Land has also unveiled similar plans for Tsim Sha Tsui Centre.

Its leasing department's deputy general manager Ann Wong said: "The shops at Tsim Sha Tsui Centre used to close at 9pm to 10pm. But we have improved the tenant mix by adding bars and special theme restaurants. The bars will open till 2am.

"As the number of shoppers has increased significantly, the retailers have extended the opening hours by one hour. This helps attract travellers to the mall."

However, Wharf (Holdings) director Doreen Lee said the developer had no plans to extend the opening hours of its shopping centres.

"It isn't cost-efficient. The number of shoppers drops significantly after 9pm, even in busy districts such as Tsim Sha Tsui and Causeway Bay," she said.

"Our malls target shoppers with a high level of disposable income who seldom go shopping after 9pm. It will increase the operating costs of our tenants if we extend the opening hours. It won't lift sales at the mall."

Colliers International retail services group senior manager Helen Mak said: "I have reservations about lengthening the opening hours of shopping centres. If the opening hours of karaokes are extended by three hours, they have to add 30 per cent more employees. The increase in revenue may not justify the rise in operating costs."

Developed by Great Eagle Holdings, Langham Place is located in Mongkok, the busiest district in Hong Kong. Many of its street-level shops stay open after midnight.

However, Jeannette Chan, the regional director of the retail department at Jones Lang LaSalle, the consultant of Langham Place, said: "We have carried out a survey on lengthening the opening hours of Langham Place. We found that people seldom go shopping after 11pm regularly. Only restaurants and karaoke venues will benefit from lengthening the opening hours."

May retail sales seen up 8.7 pct on year ago
By Susan Fenton

HONG KONG, June 30 (Reuters) - Hong Kong retail sales in May probably rose 8.7 percent by value from a year earlier, decelerating from April but still reflecting solid consumer confidence, a Reuters survey shows.

April retail sales by value were 9.4 percent higher than a year earlier, totalling a provisional HK$18.6 billion (US$2.4 billion).

"The April data was unexpectedly strong but the overall tone of consumption is still looking optimistic: unemployment is falling and tourism is good," said Tai Hui, an economist at Standard Chartered Bank.

Consumer spending has been buoyed this year by improved wage increases as a robust economy has boosted corporate profits and created strong demand for labour. In May tourism helped the retail sector as mainlanders flocked to the territory during Golden Week holidays in China and visitor arrivals for the month rose by 7.3 percent from a year earlier.

The survey forecast the volume of May retail sales would rise 7.3 percent from a year earlier, slowing from a 7.9 percent increase in April.

The government is due to release May retail sales data on Monday after 4.15 p.m. (0815 GMT).

As consumer spending has accelerated this year annual growth in retail sales has risen to 9 percent and above in the past couple of months from less than 5 percent last autumn.

Hopes that interest rates are close to peaking have also made consumers less cautious than late last year when they were hit by a series of rate increases.

Hong Kong tends to track U.S. interest rate moves because of its currency peg to the U.S. dollar.

However, the territory's biggest bank HSBC Holdings Plc on Friday ignored a U.S. rate rise on Thursday and other local banks were expected to follow given ample liquidity in the market.

That gave the local stock market a boost. It rallied more than 2 percent on Friday after the U.S. Federal Reserve toned down its warnings about the possible need for further increases.

Gains in the stock market this year have created a wealth effect that has helped boost consumer confidence.

The outlook for rates, and financial markets, remains uncertain, however, but still robust job creation should offset that in coming months and keep consumers spending, economists said.

Forecasts for May retail sales (percent change from a year earlier):


Value Volume
Bank of East Asia 10.0 8.0
ING Financial Markets 10.0 8.5
HSBC 8.9 7.2
DBS Bank 8.5 7.4
Hang Seng Bank 8.2 7.1
Standard Chartered Bank 7.5 6.4
________________________________________________
Median 8.7 7.3

Provisional Statistics of Retail Sales for May 2006
Monday, July 3, 2006
Government Press Release

The Census and Statistics Department (C&SD) released the latest figures on retail sales today (July 3).

The value of total retail sales in May 2006, provisionally estimated at $18.6 billion, increased by 5.3% over a year earlier. After netting out the effect of price changes over the same period, the volume of total retail sales increased by 2.0% in May 2006 over a year earlier.

The revised estimate of the value of total retail sales in April 2006, at $18.6 billion, increased by 9.5% over April 2005, while the volume of total retail sales increased by 7.9%.

Taking the first five months of 2006 together, total retail sales increased by 6.6% in value or 4.7% in volume over the same period a year earlier.

Analysed by type of retail outlet and comparing May 2006 with May 2005, the volume of sales of food, alcoholic drinks and tobacco increased the most, by 9.6%. This was followed by sales of miscellaneous consumer durable goods (+9.6% in volume); miscellaneous consumer goods (+6.2%); commodities in department stores (+5.9%); footwear, allied products and other clothing accessories (+4.1%); commodities in supermarkets (+3.0%); electrical goods and photographic equipment (+2.7%); and motor vehicles and parts (+2.1%).

On the other hand, the volume of sales of jewellery, watches and clocks, and valuable gifts and of wearing apparel decreased by 14.5% and 4.4% respectively in May 2006 compared with a year earlier, while the volume of sales of furniture and fixtures also decreased by 2.7%.

Based on the seasonally adjusted series, the volume of total retail sales increased by 3.0% in the three months ending May 2006 compared with the preceding three-month period.

These retail sales statistics are primarily intended to measure the sales receipts of goods sold by local retail establishments, for gauging the short-term business performance of the local retail sector. They cover consumer spending on goods but not on services. Moreover, they include spending on goods by visitors in Hong Kong but not by Hong Kong residents outside Hong Kong. Hence they should not be regarded as a comprehensive indicator of overall consumer spending. In this context, it may be noted that the share of consumer spending on services in overall consumer spending has been increasing over time.

Users interested in the trend of overall consumer spending should refer to the quarterly series of private consumption expenditure (PCE), which is a major component of the Gross Domestic Product. Compiled from a wide range of data sources, PCE covers consumer spending on both goods (purchased from all channels) and services by Hong Kong residents whether domestically or abroad.

Commentary

A Government Secretariat spokesman pointed out that the volume of total retail sales in May as compared with a year earlier rose more moderately. There were year-on-year decreases in the sales of clothing and footwear and jewellery and watches, yet sales of commodities in department stores, foodstuffs and miscellaneous consumer goods continued to record noticeable growth. More observations for the coming months are needed to ascertain if the moderation in May would continue. For the first five months of 2006 as a whole, the volume of retail sales still recorded a solid increase of 4.7% over the same period a year earlier. At present, consumer sentiment appears to remain upbeat, despite the higher interest rates and the recent correction of the stock market. The continued economic upturn and distinct growth in inbound tourism should render support to local retail business in the period ahead.

Further information

The volume of retail sales is derived from the value of retail sales after adjusting for price changes. The relevant components of the Consumer Price Index are used as deflators.

Table 1 presents the revised figures on value index and value of retail sales for all retail outlets and by type of retail outlet for April 2006 and the provisional figures for May 2006, with average retail sales from October 1999 to September 2000 taken as 100.

Table 2 presents the revised figures on volume index of retail sales for all retail outlets and by type of retail outlet for April 2006 and the provisional figures for May 2006, with average retail sales from October 1999 to September 2000 taken as 100.

Table 3 shows the movement of the volume of total retail sales in terms of the year-on-year rate of change for a month compared with the same month in the preceding year based on the original series, and in terms of the rate of change for a three-month period compared with the preceding three-month period based on the seasonally adjusted series.

Tables : http://gia.info.gov.hk/general/200607/03/P200607030115_0115_16190.pdf

Luxury items the biggest casualties as retail sales growth slows
4 July 2006
South China Morning Post

Consumers tightened their spending on fashion, jewellery and other department store goods in May, trimming year-on-year retail sales growth to 5.3 per cent in value and only 2 per cent in volume - well down on the previous month.

A government spokesman said the outlook appeared bright and tourist spending would buoy sales. But an industry representative said consumer spending was slowing and said domestic spending, not tourism dollars, was what counted.

Sales for the month totalled $18.6 billion. The results were roughly in line with estimates, but were down on the increases of 9.5 per cent in value and 7.9 per cent in volume seen in April.

Over the first five months of this year, sales rose 6.6 per cent in value and 4.7 per cent in volume.

According to the Census and Statistics Department, shops selling jewellery and other valuables were the biggest losers in May, with sales of such items falling 14.5 per cent in volume, compared with a drop of 3.9 per cent in April.

Sales of clothing and footwear were down 3.3 per cent, against a 9 per cent increase a month earlier, while department store sales growth moderated to 5.9 per cent, from 14.2 per cent. The sole bright spot was food, alcohol and tobacco, with sales up 9.6 per cent, compared to April's 6.3 per cent rise.

A government spokesman said: "Consumer sentiment appears to remain upbeat, despite the higher interest rates and the recent correction of the stock market. The continued economic upturn and distinct growth in inbound tourism should render support to local retail business in the period ahead."

Hong Kong Retail Management Association chairman Bankee Kwan Pak-hoo said he was sticking to his full-year forecast of 5 per cent sales growth for 2006 as rising retail rents and uncertainty over oil prices and interest rates dampened the sales outlook. He expects June's sales growth to be under 4 per cent, given consumers have shunned shopping for the World Cup.

"May has a lot of holidays, which should boost overall sales. But that was not the case, so consumer spending is actually slowing," Mr Kwan said.

He blamed the lull in the property market and large swings in the stock market.

Mr Kwan said sales should be driven largely by domestic demand in the second half of the year.

Hang Seng Bank economist Vincent Kwan Wing-shing expects retail sales to grow 5 per cent to 6 per cent for the year.

LCQ8: Retail links and open-air bazaars with special characteristics
Wednesday, July 5, 2006
Government Press Release

Following is a question by the Hon Vincent Fang and a written reply by the Secretary for Housing, Planning and Lands, Mr Michael Suen, in the Legislative Council today (July 5):

Question:

In the past, because of the Government's redevelopment projects, many shops in retail links and open-air bazaars with special characteristics in Hong Kong, such as the "Cloth Alley" of Wing On Street, the "Bird Street" of Hong Lok Street and the "Wedding Card Street" of Lee Tung Street, dispersed upon their relocation or closed down, resulting in Hong Kong losing many of such retail links and bazaars. In this connection, will the Government inform this Council:

(a) of the number of existing retail links and open-air bazaars with special characteristics in Hong Kong, their names and locations;

(b) whether it knows if the current redevelopment projects or town plans involve relocation or demolition of the above retail links and bazaars, including the "Sports Shoe Street" in the older district of Sai Yee Street and Fa Yuen Street at Mong Kok, and whether there are plans to retain such retail links and open-air bazaars with special characteristics; and

(c) how shops operating in such retail links and bazaars affected by redevelopment projects will be resettled?

Reply:

Madam President,

My reply to the three parts of the question is as follows:

(a) We understand that the Hong Kong Tourism Board publicizes among visitors various thematic retail links and open-air bazaars through its publications and websites, etc. Thematic retail links include Hollywood Road (Antiques Street), Des Voeux Road West (Dried Seafood Street), Ko Shing Street (Herbal Medicine Street), Bonham Strand West and Wing Lok Street (Ginseng and Bird's Nest Street), Canton Road (Jade Street), a section of Tung Choi Street between Prince Edward Road West and Mong Kok Road (Goldfish Market), Mong Kok Flower Market Road (Flower Market), a section of Tung Choi Street between Argyle Street and Dundas Street (Ladies' Market) and a section of Fa Yuen Street between Argyle Street and Soy Street (Sportswear Street), etc. Open-air bazaars include Stanley Bazaar, Tai Yuen Street Bazaar, Jardine's Crescent Bazaar, Apliu Street Bazaar, Bowring Street Bazaar, Temple Street Night Bazaar, a Bazaar in the section of Fa Yuen Street between Prince Edward West and Mong Kok Road and Bird Market in Yuen Po Street, etc.

The Hong Kong Tourism Board mainly selects thematic retail links for promotion where there is a high concentration of shops selling a particular type of goods. For open-air bazaars, there should be a certain number of shops or stalls operating in an open-air environment. Both the retail links and open-air bazaars should also be easily accessible by public transport. The views of the District Councils will also be taken into account in the selection process.

(b) The Urban Renewal Authority (URA) adopts a holistic "4R" urban renewal strategy, comprising redevelopment, rehabilitation, revitalisation and preservation of buildings of historical value within its urban renewal projects. Specifically, when considering the development modes for individual urban renewal projects, the URA will take into account the actual circumstances and widely consult the affected residents and relevant stakeholders, including gauging their views on the need and the way to preserve streets which are perceived by the public to be of special characteristics as well as existing vibrant economic activities. For example, the previous "Cloth Alley" at Jubilee Street/Queen's Road Central project in Central and the "Bird Market" at Argyle Street/Shanghai Street project in Mong Kok (now become "The Centre" and the "Langham Place" respectively) were relocated to the Western Market and Yuen Po Street Bird Garden respectively. The URA is also conducting community and building condition surveys for the Sai Yee Street project in Mong Kok with a view to working out a way forward for the project.

(c) In taking forward urban renewal projects, the URA will provide appropriate cash compensation to shop operators affected by redevelopment in accordance with the compensation policy formulated by its Board, including providing the market value of the premises and ex-gratia payments to cover possible losses arising from the relocation of their businesses. Shop operators may start their businesses again at locations of their choice with the cash compensation. The URA will handle individual cases flexibly taking into account specific circumstances of each case.

HK Dickson Concepts Jumps On Acquisition Plan
By Aries Poon
July 7, 2006

HONG KONG (Dow Jones)--Shares of Dickson Concepts (International) Ltd. (0113.HK) jumped Friday after the luxury-goods retailer said it plans to buy Tommy Hilfiger Corp.'s (TOM) retail operations in the Asia-Pacific region from Dickson Concepts' chairman for HK$396 million (US$51.0 million).

Dickson Concepts also said it aims to acquire more brands following the Tommy Hilfiger deal to strengthen its retail operations in the region.

The company's shares ended 3.6% higher at HK$8.60, having risen as much as 5.4% during the day. The benchmark Hang Seng Index settled just 0.1% higher at 16,459.78.

Dickson Concepts, whose department stores in Hong Kong include Asia's only Harvey Nichols store, said it plans to buy the entire issued capital of Tommy Hilfiger Asia-Pacific Ltd., which is wholly owned by its chairman, Dickson Poon. THAP holds a license to sell clothes and accessories bearing the Tommy Hilfiger brand name in the region.

Dickson Concepts sells many luxury brands, including Brooks Brothers, Polo Ralph Lauren and Benetton, in Hong Kong, Taiwan, Singapore, Malaysia, the Philippines and mainland China.

"I can tell you for sure that we will continue to study the opportunities of acquiring more licenses to sell other brands," Poon told reporters at a news conference, but he didn't elaborate on specific brands.

The proposed price for THAP is equivalent to 7.8 times its net profit for the year ended March 2006, Poon said.

He also said he plans to increase the number of Tommy Hilfiger retail stores in Hong Kong, Taiwan, mainland China, Singapore and Malaysia to 159 by 2014. THAP now has 89 stores across the Asia-Pacific region.

The deal, which is subject to shareholders' approval, is aimed at strengthening Dickson Concepts' retail business in the region.

"Tommy Hilfiger has a good sales network in the mainland and Asia, I can see economies of scale and synergy to Dickson Concepts," Poon said. "It must be an EPS-accretive deal."

He declined to say by how much the deal would boost Dickson Concepts' earnings per share or give the internal rate of return of THAP's assets.

Poon didn't disclose THAP's operating margin, but Executive Director Nelson Chan said: "The level is higher than the group's overall operating margin of 7.7% last year."

JP Morgan said in a research note that the deal could boost Dickson Concepts' EPS by 15% for the fiscal year ended March 2007, and by another 13% the following fiscal year.

"We view the potential transaction as positive and maintain our overweight rating," the investment bank said.

Poon said the Tommy Hilfiger deal will start contributing profit to the company once the transaction is completed, which is expected not later than Oct. 4.

Kitty Chan, director at CASH Asset Management Ltd., said: "The deal shows the management is bullish on the region's retail and tourism sector."

For the fiscal year ended March 2006, THAP had a net profit of HK$50.7 million, up from HK$49.5 million the previous year. Its consolidated net assets stood at HK$60.2 million at the end of March.

Poon said THAP's operating cash flow in its last fiscal year was "over HK$60 million."

Mid-May, shareholders of U.S. apparel maker Tommy Hilfiger approved the US$1.6 billion acquisition of the company by private-equity firm Apax Partners.

Founded in 1984, Hilfiger was one of the hottest fashion brands in the 1990s, when it was distributed in as many as 1,500 department store locations. Now considered a fading and mature brand in the U.S., Hilfiger still performs well internationally, particularly in Europe, where it has stores in London, Vienna, Milan and Zurich.

Last year, Hilfiger put itself up for auction, attracting numerous lookers and bidders including Wal-Mart Stores Inc. (WMT), Phillips-Van Heusen Corp. (PVH) and a number of private-equity firms.

Flat growth in retail rents points to slowdown in shopping mall sector
12 July 2006
South China Morning Post

Rental growth at shopping malls slowed in the first half of this year and is likely to remain stable in the second half of the year, with property consultants saying the retail rental market has peaked.

Rental growth, which hit 10 per cent in the first half of last year, increased just 3.7 per cent over the past six months, according to Jones Lang LaSalle.

"Rental growth in shopping malls has been in a state of slowdown this year," said Jeannette Chan, regional director of the retail department at Jones Lang LaSalle.

"Rental at poorly designed malls in non-core area has been flat for the past six months.

"However, retail rents at malls in traditional shopping areas have increased by 3.7 per cent, due to the tight supply of retail space in prime, highly sought after areas," Ms Chan said.

She said she believed major fashion chains and restaurants would be conservative in their expansion plans this year.

"Many retailers told us that the turnovers in the last quarter are below their expectations.

"In July, major retail chains are holding sales to boost buying interest - that's earlier than it was two years ago.

"They won't be offering aggressive rents to secure retail spaces in malls this year."

Some retailers have even opted to take up cheaper retail space at malls in non-core areas, according to DTZ Debenham Tie Leung retail department director Lawrence Heung.

"Sun Hung Kai Properties' East Point City in Tseung Kwan O has become a favoured non-core mall for retailers," Mr Heung said.

"Rents at non-core district malls have increased by 8 per cent in first half of the year, while rents at malls in busy areas gave increased by 4 per cent."Yvonne Liu

HK retailers attack goods and services tax plan

HONG KONG, July 12 (Reuters) - Hong Kong retailers on Wednesday voiced their opposition to government proposals for a goods and services tax, saying such a levy would hurt tourism and investment.

"Hong Kong won't be a shopping paradise any more," said Bankee Kwan, chairman of the Hong Kong Retail Management Association.

The government is set to launch a public consultation on a goods and services tax (GST) next week. Local media reported the consultation paper would advocate an across-the-board 5 percent tax and propose that any introduction of a GST would be accompanied by a cut in the standard income tax rate to 11 percent from 16 percent. Tax bands would be widened too, it said.

Tax relief for low income families is also expected to be included as well as a GST rebate for tourists. However, Kwan said even with a rebate, prices of consumer goods would rise as retailers would have to cover the administrative and other costs of a GST.

He also argued that Hong Kong's simple tax regime -- with flat income and corporate tax rates -- had encouraged investment in the territory. Introduction of a GST would make the system more complex, potentially discouraging investment, he said.

It would also make it easy for the government to raise taxes, and thereby less prudent about reining in public expenditure, he said.

He cited the case of Singapore, which raised its sales tax from 3 percent in 2002 to 4 percent in 2004 and to 5 percent last year. And he said there was plenty of scope for further increases given that value added tax in France stands at 19.6 percent and is at 17.5 percent in Britain.

A government spokeswoman would not confirm reports that the government would propose cutting income tax if a GST is introduced.

However, Financial Secretary Henry Tang has said that the GST consultation would include tax relief and compensation measures.

A 5 percent GST would raise about HK$30 billion (US$3.8 billion) a year in government revenue.

The government says it needs to expand a narrow tax base -- more than 40 percent of wage earners pay no income tax -- to make its finances more secure and sees a GST as a fair way to do that.

The public and opposition parties have so far opposed the plan but the government will be hoping the prospect of tax cuts will win people over.

Tang said the consultation would last nine months and the government would then submit a report on the issue to the next government.

Chief Executive elections are due to be held next March. However, implementation of a GST could take up to three years, the government has said. (US$=HK$7.8)

Malls get an extreme makeover
The Link Reit is spending big to boost the value of its assets but will its outlay be matched by public estate spending power?
12 July 2006
South China Morning Post

With three of the Link Reit's shopping malls in public housing estates going head to head with their rivals at private shopping centres, it is time for an extreme makeover.

Colourful light fixtures, higher-than-usual ceilings and the latest in toilet facilities are just part of the trust's efforts to enhance its assets and boost the value of the reit.

The effort seems to be paying off with a better tenant mix - and property consultants say the makeovers are a good start - but whether it will be enough to get public housing tenants to spend their money there, only time will tell.

Meanwhile, the speed of the renovations - the makeover is at just three of the reit's 151 malls - has raised concerns the investment trust may be too slow to realise its rental growth potential.

Another hidden factor is latent political pressure that could come to bear if existing tenants at the Link's properties are kicked out.

As at the end of this month, renovation for the three shopping malls - Tsz Wan Shan Shopping Centre in Wong Tai Sin, Lung Cheung, also in Wong Tai Sin, together with Hau Tak Mall in Tseung Kwan O - will be complete.

"Traffic flow has jumped more than 60 per cent since the Tsz Wan Shan Shopping Centre was revamped in December last year," said Helena Chan, leasing and control manager of Link Reit.

However, a senior executive of a private mall operator said that spending power at the malls would decide much of the success at the reit's assets.

Completed in 1997, the Tsz Wan Shan Shopping Centre, with a total gross floor area of 385,254 square feet, is the first mall to undergo the Link Reit makeover.

The company has turned the 64,000 square foot shopping space at the mall, vacant for more than a year after Jusco moved out, over to fashion and health shops as well as specialty restaurants. And it successfully attracted tenants such as fashion retailers Baleno, Uright, Walker Shop and the Chinese medicine firm Wai Yuen Tong Medicine, to the public housing mall.

Property consultants say that while it is a good sign that major chain retailers have been attracted to the malls, the big unknown is whether it can fill its remaining malls in the same way.

"It is easier for them to get tenants for the first few malls as some retailers want to test the market," said the senior executive.

"The company has established a very experienced and strong leasing team, which mainly comes from Sun Hung Kai Properties. They established a close relationship with many retail clients when they were in the property company.

"But will such relationships help them to find sufficient clients for the rest of the malls? Tenants will only think that if they know they can make money in the mall.

"An ageing population and the consumption power of housing estate households, in general, are the key concerns, even though we see some well-offs living in public housing estates," the senior executive said, adding that marketing campaigns are critical to the success of the malls where it is offering one hour's free parking for every two purchased.

The Link Reit maintains it is still too early to show statistics showing the consumption power at the Tsz Wan San mall.

Centaline (Holdings) chairman Shih Wing-ching, who recently visited the Tsz Wan Shan Shopping Centre, said: "The hardware has improved. You can tell it has invested quite a lot in it. But is it necessary to renovate the toilet facilities at a public housing estate mall to such a high standard? I personally think it is not.

"They want to show people they have put some effort into making a change. But hardware is not the most important factor for tenants. The most important factor is if tenants can make money in the mall."

Chan Man-sit, chief of the Wai Yuen Tong shop at Tsz Wan San Shopping Centre, said the sales results so far were better than expected and the company had decided to open another mall in Lung Cheung mall.

"One important key to the success of a shopping mall is the size. If a consumer can do their shopping within 10 minutes, no matter what kind of marketing activities the operator provides, it will not be successful," said Sunny Yam, chairman of Sheraton Valuers.

"This is the advantage of the Link Reit malls, which are on a large scale.

"But what does concern many is the political factor. Under the current political environment, it is not easy for the company to raise rents," said Mr Yam.

Mr Shih agrees.

"It is a sin if you ask, for example, an old-style bakery to move, making way for modern and franchised bakery to fit the entire tenant mix," he said.

According to Goldman Sachs, the average rent achieved by the top Link Reit malls was around $30 per square foot per month, or $1 above the $29 per sq ft recorded in July last year.

"We believe this moderate rental enhancement would disappoint those investors who have been looking for fast rental growth in the first one to two years after the initial public offering," according to its report.

Watson targets higher-end shoppers with new outlet
13 July 2006
South China Morning Post

Dominant health and beauty retailer A.S. Watson has stepped up its drive to gain market share in the fiercely competitive sector by reaching out to higher-end customers.

The Li Ka-shing-controlled company has spent $6 million on a store in Times Square under a different brand name to cater to a niche in the beauty and health markets, including organic and men's skin-care products and weight-management supplements.

Masstige, a 3,000-sq ft store whose name comes from a marketing buzzword combining "mass" and "prestige", is set to compete for middle-class customers of other similar retailers. A Watson spokeswoman expected locals and individual mainland travellers to be Masstige's key customers.

But there were no plans to open mainland stores because the market was not yet mature.

"We plan to open outlets in Tsim Sha Tsui and Causeway Bay if sales at this store are satisfactory," the spokeswoman said, adding that the beauty and health corners at Watson's stores catered to the mass market.

She said Masstige was not aimed at attracting customers of either Sa Sa or Mannings because many brands were sold exclusively in Masstige.

Brands on sale at the store include Peter Thomas Roth, Giovanni, Korres and Vichy.

The upscale push comes as some local cosmetic retailers plan to close or move some outlets after aggressive expansion. Sa Sa International rues its decision to open new stores in key areas last year and blames the expansion for the 8.4 per cent fall in the cosmetic retailer's full-year net profit. The idea was inspired by misplaced optimism over visitor numbers to Hong Kong Disneyland.

Company spokeswoman Macy Leung said the firm did not see direct competition from Masstige because Sa Sa's product range catered to people across all sectors, while Masstige seemed to focus on the middle class.

Maria Norrman, merchandise director for Watson's personal care stores, said the average spending per visit at Masstige was expected to be "more than double" the $80 average spent at any Watson's beauty and health corner.

Bauhaus bets on mainland for growth
Fashion chain to double China stores as rising rents eat into Hong Kong margins
15 July 2006
South China Morning Post

Fashion retailer and wholesaler Bauhaus International, which plans to double the number of franchised stores it has on the mainland, may also set up company-owned outlets in China.

Chairman George Wong yesterday said he expected the firm's mainland operations, which accounted for just 9 per cent of net profit in the year to March, to be its main source of earnings growth in the future.

The firm on Thursday reported that annual net profit rose 8.1 per cent to $50.9 million.

The retailer opened 10 franchised stores in the mainland in the past financial year, bringing the total to 18 and plans to raise that to 36 by March next year.

Revenue from its mainland operations reached $17.7 million during the year or 4.1 per cent of the company's total turnover of $436 million, up from $7.7 million or 2.2 per cent of revenues a year earlier.

Bauhaus's core business is in Hong Kong, which produced 81.5 per cent of last year's sales. Its Taiwan outlets accounted for another 6.5 per cent.

Financial controller Eric Chung said same-store sales grew 6 per cent between April and last month with Hong Kong revenue climbing 10 per cent year on year as sales in Taiwan jumped 32 per cent.

The company blamed higher rental costs in Hong Kong and depreciation for a two percentage point decline in net margins to 11.7 per cent.

Rent expenses in Hong Kong ate up 22.3 per cent of local sales revenue during the period compared with 20 per cent a year ago.

Although its profits in Taiwan fell 33 per cent to $3 million as same-store sales fell 4.9 per cent, Ms Tong said the company intended to add as many as eight stores to its existing 17 outlets.

Bauhaus shares jumped 10.41 per cent yesterday to close at $1.06.

Bossini halts expansion as rent rises hit
Sherman So
Hong Kong Standard
Wednesday, July 19, 2006

Bossini International, a casual-wear retailer, will put the brakes on opening new stores after full-year profit fell 42 percent on intensified competition and rising Hong Kong rents.

Net profit fell to HK$105 million in the year ended March 2006 from HK$181 million 12 months earlier.

Revenue rose 9 percent to HK$2.2 billion as the company added 241 retail and franchise outlets.

"Keen competition from both local and foreign brands has driven us to give deep discounts to customers so as to clear our inventory," said executive director and director of finance Kathy Chan So-kuen, citing Hong Kong and China markets in particular. The company, which has a total of 1,068 retail and franchise outlets in 18 countries, plans to open 100 stores in the mainland by March 2007 and 14 elsewhere.

"China still has the highest potential," Chan said. "We just need to have the product that fits the market."

Bossini will spend HK$100 million in the year to March 2007, compared with capital expenditure of HK$81 million a year earlier.

Of the targeted amount, HK$70 million will go on shop renovation and HK$20 million on information technology.

In Hong Kong, which contributed 37 percent of revenue, rental expenses jumped 15 percent last year. Rental costs may climb a further 10 percent by March 2007, Chan said.

Retail sales growth in Hong Kong, where Bossini has 33 stores, fell short of company expectations at 1 percent.

"We expected growth in high teens," said Chan.

Revenue from mainland retail outlets rose 6 percent as Bossini added 70 stores. Same-store sales declined 9 percent in the mainland, which contributes 16 percent of total revenue.

The low-end "Sparkle" brand in China was hit hard during the year, while the more up-market "Bossini" and "Bossini style" were more resistant, Chan said.

"We will focus on improving product design and the overall product direction" in China, she said.

"A rebranding campaign is planned this year."

Operating profit margins for mainland retail and franchise outlets declined to 1 percent from 7 percent.

Bossini added 81 franchise outlets in the year for a mainland total of 284. The company declared 1.8 HK cents as final dividend, making 3.6 HK cents total dividend, compared with 5.7 HK cents in the previous year. Bossini shares closed Tuesday unchanged at 65 HK cents.

More flexible leasing terms to reduce vacancy rate of HA's retail premises
Thursday, July 20, 2006
Government Press Release

The following is issued on behalf of the Housing Authority:

The Housing Authority's Commercial Properties Committee today (July 20) endorsed a package of measures to improve occupancy rate at retail premises in 181 public rental housing estates or Home Ownership Scheme courts.

More flexible terms of letting by advertising short-term lettings through instant open tender or direct negotiations on a first-come-first-served basis will be introduced under the following conditions:-

- Retail premises of up to 70 sq. m. in size offered to let unsuccessfully in open tender exercise at least thrice for a standard term will be let for a term of 12 months;
- The premises will be put forth for letting by open tender under which the lease can be terminated by either party by one month's notice;
- Payment of one month's rent in advance and a rent deposit of one month only will be required;
- One month rent free period will be granted to the short-term lettings;
- On expiry of the 12 months period, application for extending the lease to a standard three-year term may be considered subject to rental re-assessment.

To address the high vacancy rate in the conventional wet markets, extra rent free concession will be offered for long-standing vacant shopstalls which have been offered to let unsuccessfully at least thrice at open tender exercise.

The extra rent free periods, ranging from two months to six months rents, will be granted for letting of long vacant market stalls depending on the vacancy periods.

To deter abuse of the concession, the extra rent free period will be granted in stages during the three-year term tenancy. The two extra months' rent free will be granted in the 6th and 12th months of the tenancy; the four extra months rent free will be granted in the 6th, 12th, 18th and 24th months of the tenancy; and the six extra months' rent free will be granted in the 6th, 12th, 18th and 24th, 30th and 36th months of the tenancy.

The Committee also endorsed the adoption of a proactive approach to solicit non-Government organizations to take up long vacant retail premises and carparks due to overprovision of such facilities for development of other community services.

Hang Fung forecasts slump in mainland tourist spending
21 July 2006
South China Morning Post

Hang Fung Gold Technology, which posted a 21 per cent increase in full-year net profit to $129.6 million, plans to slow expansion in Hong Kong, citing a slowdown in spending by mainland tourists.

The Hong Kong-listed company, famous for creating a gold toilet which holds the record for the world's most expensive lavatory, plans to open only one store in Hong Kong this year at Yuen Long.

Average spending in Hong Kong stores was between $2,000 and $3,000 last year, according to chief executive Kathy Ng, compared with average spending of between $3,000 and $4,000 a year ago.

"The first lot of individual travellers came from cities which are better-off, such as Shanghai. But as tourists start coming from other cities, we found their spending power was not that high," she said.

Revenue contribution from mainlanders to its eight Hong Kong stores dropped to 70 per cent from 80 per cent a year ago, Ms Ng said. Sales in Hong Kong accounted for about 46 per cent of the company's $2.88 billion turnover during the period.

Average receipt at its first Macau store, which opened last year, was $3,000.

Ms Ng said the company aimed to open two stores in Macau this year provided it found good locations.

Chairman Lam Sai-wing warned that the company would not open new Hong Kong stores if the city pressed ahead with its proposed 5 per cent goods and services tax.

"If the government introduces sales tax, we will move to the mainland and Macau instead," he said.

Ms Ng said its Hong Kong stores would add more jewellery products, which retail at higher margins than other gold products.

On the mainland, the company has 100 stores, including franchised outlets and aims to open 30 more this year. Sales in the mainland accounted for 46 per cent of revenue.

Meanwhile, Mr Lam said Hang Fung had built a $300 million "gold house" at To Kwa Wan which is due to open in three months.

The 3,000 square foot development, which used up more than two tonnes of gold in its construction, will help promote two Swiss watch brands for which Hang Fung has the local agency licence.

Mr Lam said the company expected a surge in mainland customers following the recent introduction of a 20 per cent levy on watches priced at more than 10,000 yuan in China. Watches account for 3 per cent of the company's sales.

Hang Fung's share price rose 7.6 per cent to 99 cents yesterday.

Union Square mall fills 70pc of retail space
19 July 2006
South China Morning Post

MTR Corp has leased 70 per cent of its Union Square flagship shopping centre at Kowloon Station 18 months before the opening, underscoring strong demand for retail space, according to a senior official.

The one million-square foot shopping centre - branded Elements - above the Airport Express railway station was being promoted as an upmarket dining and shopping destination, MTR property director Thomas Ho Hang-kwong said yesterday.

He said the remaining retail space at Union Square would be reserved for international brands, which had yet to have any presence in the city. Sources said Swedish retailer H&M was one of them.

The mall - 80 per cent owned by the MTR and the rest by Sun Hung Kai Properties - is part of the $25 billion Union Square development that also comprises two five-star hotels, a 118-floor International Commercial Centre office tower and high-end apartments.

Denise Tsang

Hong Kong's Hopewell to spend 400 mln hkd on turning HITEC into a mall
19 July 2006
AFX Asia

HONG KONG (XFN-ASIA) - Hopewell Holdings Ltd, a property and toll road firm controlled by businessman Gordon Wu, will spend 400 mln hkd on turning the Hong Kong International Trade and Exhibition Center (HITEC) here into a shopping mall as part of its effort to increase its income from rents, the South China Morning Post reported.

The newspaper quoted Hopewll associate director William Wong as saying the company will renovate the HITEC, in the industrial area of Kowloon Bay, and turn it into a 1.5 mln-square-foot mall which will open next year.

"Our business strategy in Hong Kong is to acquire buildings and redevelop [them] for rent. We will not acquire government land with high prices like other developers do," he said.

Top Italian jewellery brand arrives in Hong Kong
Saturday, July 29, 2006
Government Press Release

Leading Italian luxury jewellery brand, Damiani, celebrates the grand opening of its first store in Hong Kong in the International Financial Centre (ifc Mall) on today (July 29).

Damiani and its Hong Kong franchise partner, Elique Limited, formed Damiani Hong Kong and have strong confidence in the Hong Kong retail market with plan to open more retail shops including a flagship store in 2007.

The CEO of Damiani, Mr Guido Grassi Damiani, said, "We decided to enter the Hong Kong market because it is Asia's centre of style and fashion. Consumers from the region come here to shop, and more importantly, to learn and experience the latest fashion trends in the world. Hong Kong is a 'must-go' place for all established international brands."

"Damiani has always been synonymous with the best of the 'Made in Italy' tradition throughout the world. Its classic nature is based on shapes, the quality of the gems and high precision. I am sure the sophisticated local consumers and visitors will embrace our products," Mr Damiani added.

The Executive Director of Damiani Hong Kong, Mr Josen Huen, remarked, "Damiani is the only jewellery company with a record of winning over 18 Diamonds International Awards, the Oscars of the jewellery world. We are honoured to have the opportunity to introduce this prestigious brand to Hong Kong consumers, who are renowned for their taste and fashion consciousness."

Representing Invest Hong Kong, Head of Consumer, Retail and Sourcing, Ms Rowena Hoy, welcomed Damiani to Hong Kong, congratulating them on their entry into Hong Kong's retail market. "With our vibrant retail market and strong tourism Hong Kong has long been seen as a 'shopping paradise' for local consumers and tourists alike. I am pleased that Damiani has decided to take advantage of the exciting retail opportunities Hong Kong offers, to showcase its products in our dynamic city in the company of many other internationally renowned brands. I wish the company every success in its continued development in Asia’s world city and beyond."

Damiani was founded by Enrico Grassi Damiani, who began creating jewels in 1924. This master goldsmith soon made Damiani the trusted jeweller for well-known families, who turned to him to create small masterpieces respecting the traditions of classic jewellery. Today, there are over 28 Damiani Boutiques worldwide. For further information, please visit the website at www.damiani.com.

Hong Kong retail sales growth slips in June

HONG KONG, Aug 1, 2006 (AFP) - Hong Kong retail sales grew 5.2 percent to 17.4 billion dollars (2.23 billion US) in June, slipping from a year-on-year increase of 5.3 percent in May, official figures showed Tuesday.

The government said consumer sentiment remained largely upbeat in recent months despite a sharp fall in the stock market in May and June.

For the first half of 2006, total retail sales increased 6.4 percent.

"Looking ahead, fairly strong consumer sentiment on the back of a generally (positive) economic outlook and improving employment income, together with a sustained expansion of inbound tourism, will continue to render support to the local retail business," the government said in a statement.

Japan's Uniqlo eyes stake in HK's Giordano
By Daisy Ku

HONG KONG, Aug 4 (Reuters) - Japan's Fast Retailing , which runs casual wear chain Uniqlo, plans to buy a stake in Giordano International Ltd. to expand its overseas operations, market sources said on Friday.

Hong Kong-based Giordano, whose shares were suspended from trading on Friday, has appointed HSBC as its financial adviser, a source familiar with the situation said.

Giordano, which has no single major shareholder, has a market value of about US$780 million, less than one-tenth of Fast Retailing's US$8.8 billion.

"Given the declining popularity of Giordano's products, we would be happy sellers if HK$5.00 per share was offered," said Daiwa analyst Peter Chu.

At HK$5.00 per share, a 23 percent premium to Giordano's closing prices on Thursday, the firm would be valued at US$955 million, or 19 times its 2006 earnings, versus Fast Retailing's 22 times price-to-earnings ratio, Chu said.

Fund managers expect the deal has a good chance to go through despite Giordano management's reluctant attitude. Top five institutional holders control nearly 51 percent of the firm, while the management has less than a 3 percent stake.

Aberdeen Asset Management, which owns 14.73 percent of Giordano, declined to comment on whether it has been approached by Fast Retailing. But senior investment manager Flavia Cheong said "everything has a price".

Aberdeen Asset Management, Harris Associates, Mattews International Capital Management, JPMorgan Chase & Co. and Emerging Markets Management bought shares in Giordano at about HK$4.00 to HK$5.78 each since January 2005.

Fast Retailing, which has about US$1 billion cash on hand, has focused on development of its Uniqlo brand products. It would gain access to Giordano's 1,700 outlets across Asia, including more than 700 stores in China if the deal goes through.

"The acquisition makes sense in terms of expanding Fast Retailing's distribution network," added Chu.

Since opening an outlet in Tokyo's Harajuku neighbourhood in 1998, the company has achieved nationwide brand recognition for offering low-price fleece apparel. However, as demand for the Uniqlo products eased, the company has scaled down its overseas operations since 2003.

Uniqlo, which now operates about 30 overseas stores, including seven mainland China outlets, posted a nine-month cumulative operating loss of 600 million yen ($5.22 million) in the fiscal year ending August 2006.

Shares of Giordano have dropped 6 percent so far this year, lagging a 14 percent gain in the benchmark Hang Seng Index <.HSI>.

Giordano surges amid Fast Retailing approach
By Donny Kwok and Daisy Ku

HONG KONG, Aug 7 (Reuters) - Shares of Giordano International Ltd. surged up to 21.6 percent on Monday, as the stock resumed trading after the bargain fashion chain confirmed it had been approached by suitors Fast Retailing Co. Ltd. .

Shares of the Hong Kong-listed retailer soared to HK$4.95 soon after the market opened before easing to HK$4.80 in the afternoon, as investors hoped the potential Japanese buyer would pay a premium for the once high-flying chain.

Fast Retailing, the world's number-six apparel retailer, dropped 2.5 percent to 9,380 yen per share.

But "whether Fast Retailing will be drawn into bidding a premium on an elevated share price remains to be seen," wrote Credit Suisse analyst Marisa Ho.

Fast Retailing, operator of casual-wear chain Uniqlo, seemed keen to spend its US$1 billion cash pile to buy an Asian presence, especially in China, given its ambition of having 40 percent of group sales from overseas by 2010, up from 6 percent now, Ho said.

But even buying 51 percent of Giordano would easily cost Fast Retailing US$600 million, she estimated. That would take 12 years of Giordano's operating free cash-flow to return the investment at an expected single-digit percentage rate of earnings growth.

Fast Retailing, which is actively looking for merger and acquisition opportunities to help achieve its sales target of 1 trillion yen ($8.76 billion) by 2010, said on Saturday it had approached Giordano to discuss an alliance and other possibilities.

Giordano's Chairman, Peter Lau, said in a separate statement that the company had received an approach from Fast Retailing, "which may or may not lead to any offer for the shares".

Morgan Stanley expects other international retailers looking to expand in Asia to emerge as competing bidders.

The Hong Kong-based retailer has no single major shareholder, with the top five shareholders controlling nearly 51 percent of the firm, while the management owns less than 3 percent. Its market value of US$917 million is about one-tenth of Fast Retailing's US$8.8 billion.

ACCESS CHINA

If the deal goes through, Fast Retailing would win access to Giordano's 1,700 outlets across Asia, including more than 700 stores in China.

Fast Retailing first entered China in 2002, but the operation remained small and only turned a small profit last year.

"If Fast Retailing actually acquires Giordano, which has been a pioneer in making and selling low-cost apparel produced in China, we would anticipate production synergies and an acceleration in development of operations in China," wrote UBS analysts Taketo Yamate and Nazomi Moriya.

But Goldman Sachs analyst Sho Kawano expects few substantial synergies from the deal.

Fast Retailing said last September it would invest 300-400 billion yen by 2007/08 to take majority stakes in fashion companies with global growth potential and the ability to achieve future annual sales of more than 100 billion yen.

Fund managers say Fast Retailing stands a good chance of gaining a stake in the Hong Kong company despite Giordano management's reluctance. (US$1=HK$7.8 yuan) ($1=114.22 Yen)

Kowloon's quality malls draw luxury and trendy brands
9 August 2006
South China Morning Post

The growth in the number of quality shopping arcades and a change in shoppers mix have lured luxury and trendy brands to open their flagship stores or first Hong Kong outlets on Kowloon peninsula.

"For years, luxury brands had preferred just to have their presence in the prime area of Hong Kong island. But the trend is now changing," said Leng Yen Thean, assistant general manager of Harbour City Estates' centre management division.

To capture the growing number of affluent mainland shoppers, particularly those who arrive in Hong Kong by sea in Tsim Sha Tsui, big names are now willing to cross Victoria Harbour to establish their presence.

For instance, Coach and Givenchy have opened their first flagship stores at the new extension of Harbour City in Tsim Sha Tsui, originally a car park. It now has 45,000 square feet of retail space and houses trendy brands such as Anya Hindmarch, Jil Sander and Jimmy Choo.

Property consultants say some mainland shoppers probably prefer to buy luxury brands in Kowloon malls as they provide one-stop shopping for merchandise ranging from clothes to electronic appliances. These malls also offer a wide range of food and beverages.

Betty Leong Sin-ling, Elements' chief retail development manager, agrees. But she says the attraction also stems from a rise in new malls offering luxury-brand tenants more choices.

"There has always been an undersupply of quality malls in Kowloon," she said.

Elements, comprising two floors with a combined 800,000 square feet area, is a key part of Union Square at Kowloon Station. The mall will open in 2007.

Ms Leong said Swedish retailer H&M had just leased 24,500 square feet of retail space at Elements for a five-year term. H&M sells less expensive, trendy work clothes for young shoppers. "It will be the first Hong Kong store of H&M when the mall opens next year," she said.

Retailers had also realised that the number of middle-class shoppers in Kowloon was growing, said Ms Leong.

There were 106,034 families in Kowloon and the New Territories with incomes exceeding HK$60,000 per month, more than the 73,308 families on Hong Kong island, she said.

More than 70 per cent of Elements' retail space are leased at rents that are on par with high-end Canton Road shops.

HK's July retail sales seen up 5.3 pct on yr ago
By Alison Leung

HONG KONG, Aug 29 (Reuters) - Hong Kong's retail sales in July probably rose 5.3 percent by value from a year earlier lifted by a strong stock market and improved wages, a Reuters survey shows.

Forecasts showed growth in value terms was close to levels in June and May but weaker than in April.

Retail sales in July were estimated to have risen 3.5 percent by volume from July 2005 versus a 3.3 percent rise in June.

"People increased their shopping after the World Cup and consumers react more to the unemployment rate and the performance of the stock market," said Paul Tang, chief economist at Bank of East Asia.

Retail sales expanded at their slowest annual pace in four months in June, when the World Cup kept people indoors and away from shopping malls. But economists said the end of that global event and a rising stock market meant consumers likely spent more in July.

Annual growth in Hong Kong's retail sales has been volatile, partly due to seasonal factors and base effects.

Growth averaged 4.6 percent in the months through last autumn but picked up to top 9 percent in March and April of this year -- before slowing again in May.

The government is due to release July retail sales data on Friday after 4.15 p.m. (0815 GMT).

On a month-on-month, seasonally adjusted basis, July retail sales should have inched up just 0.5 percent in value from June and edged a mere 0.1 percent higher in volume terms, ING Financial Markets estimates.

"Domestic consumption remains strong as wages have picked up, but inbound mainland tourist arrivals did not grow as much as expected in the past few months," said Kevin Lai, Senior Economist at Hang Seng Bank.

Tourism is one of Hong Kong's major economic drivers, accounting for about 9 percent of gross domestic product.

"Summer is not a peak season for tourism, so the growth in retail sales should be steady, while fundamentals on consumption remain good," said George Leung, chief economist at HSBC.

In June, retail sales totalled HK$17.4 billion (US$2.2 billion), up 5.2 percent from a year earlier.

Better job security and a pick-up in wages -- after lagging economic growth for two years -- have lifted consumer confidence.

Stocks rebounded in mid-June from a brief correction. The blue chip Hang Seng Index <.HSI> hit a six-year high this month.

Economists, however, warned that the economy may be slowing as economic growth stuttered to a halt in the second quarter because exports, consumption and investments all slowed.

Hong Kong's economy is expected to grow around 6 percent this year after surging more than 7 percent annually in the past two years, economists said.


Value Volume
Bank of East Asia 6.5 5.5
HSBC 6.3 4.5
Citigroup 5.5 3.6
DBS Bank 5.3 3.5
Hang Seng Bank 5.1 3.2
ING 4.5 2.5
Bank of America 4.9 3.0
---------------------------------------------------
Median 5.3 3.5

(US$=HK$7.8)

We're among the world's big optimists
Albert Wong
30 August 2006
Hong Kong Standard

Hong Kong consumers are among the most optimistic in the world, with 54 percent saying they are ready to indulge in some retail therapy within the next year, according to a consumer confidence survey.

ACNielsen's latest half-yearly survey, released Tuesday, found Hong Kong ranked ninth in the world for consumer confidence with 111 points _ five points above the global average.

This was one notch up from last year's 10th position.

However, 64 percent of respondents still consider the state of the economy to be their major concern, while 48 percent feared most for their jobs and 37 percent for their health.

"Soaring fuel prices and rising interest rates have imposed pressure on corporations, along with rising rental and labor costs, and Hong Kong consumers remain cautious about fundamentals like job security," said Fanny Chan Ying-fong, managing director of ACNielsen Hong Kong.

Chan said consumers were more upbeat and positive in the first half of the year because of the "positive economic and business outlook."

Malaysian and Indonesian consumers also registered the same level of optimism as Hong Kong, while those in Taiwan were the fifth least optimistic. Koreans were the world's most pessimistic. "In South Korea, consumers have been impacted by global oil prices and the rising won in the past few months, and a stagnant real-estate market has also fueled insecurity and dampened consumer confidence overall," Chan said.

India topped the chart for consumer confidence for the third time in a row, and Indian consumers are also the most likely to go on shopping sprees over the next 12 months.

"India's booming economy shows no sign of slowing down," Chan said.

Most Hong Kong people prefer to save their earnings, although 43 percent said they were prepared to spend on home entertainment, 31 percent on new clothes and 16 percent on shares or mutual funds.

The ACNielsen consumer confidence index is based on consumers' confidence in the job market, state of their personal finances and their readiness to spend.

The latest survey, conducted between late May and early June, polled about 21,780 Internet users in 40 countries.

Provisional Statistics of Retail Sales for July 2006
Friday, September 1, 2006
Government Press Release
http://www.info.gov.hk/gia/general/200609/01/P200609010098.htm

The Census and Statistics Department (C&SD) released the latest figures on retail sales today (September 1).

The value of total retail sales in July 2006, provisionally estimated at $18.6 billion, increased by 7.1% over a year earlier. After netting out the effect of price changes over the same period, the volume of total retail sales increased by 5.2% in July 2006 over a year earlier.

The revised estimate of the value of total retail sales in June 2006, at $17.4 billion, increased by 5.2% over June 2005, while the volume of total retail sales increased by 3.4%.

Taking the first seven months of 2006 together, total retail sales increased by 6.5% in value or 5.5% in volume over the same period a year earlier.

Analysed by type of retail outlet and comparing July 2006 with July 2005, the volume of sales of electrical goods and photographic equipment increased the most, by 12.8%. This was followed by sales of commodities in department stores (+11.8% in volume); footwear, allied products and other clothing accessories (+11.1%); miscellaneous consumer goods (+7.9%); food, alcoholic drinks and tobacco (+7.0%); motor vehicles and parts (+4.5%); wearing apparel (+4.3%); miscellaneous consumer durable goods (+3.5%); furniture and fixtures (+1.6%); and commodities in supermarkets (+1.3%).

On the other hand, the volume of sales of fuels and of jewellery, watches and clocks, and valuable gifts decreased by 5.1% and 1.9% respectively in July 2006 compared with a year earlier.

Based on the seasonally adjusted series, the volume of total retail sales increased by 0.6% in the three months ending July 2006 compared with the preceding three-month period.

These retail sales statistics are primarily intended to measure the sales receipts of goods sold by local retail establishments, for gauging the short-term business performance of the local retail sector. They cover consumer spending on goods but not on services. Moreover, they include spending on goods by visitors in Hong Kong but not by Hong Kong residents outside Hong Kong. Hence they should not be regarded as a comprehensive indicator of overall consumer spending. In this context, it may be noted that the share of consumer spending on services in overall consumer spending has been increasing over time.

Users interested in the trend of overall consumer spending should refer to the quarterly series of private consumption expenditure (PCE), which is a major component of the Gross Domestic Product. Compiled from a wide range of data sources, PCE covers consumer spending on both goods (purchased from all channels) and services by Hong Kong residents whether domestically or abroad.

Commentary

A Government Secretariat spokesman pointed out that the volume of total retail sales increased solidly further in July over a year earlier. The improving employment conditions, rising household income and recent pause in US interest rate hikes all helped to underpin consumer confidence. Looking ahead, local retail business should continue to fare well, on the back of sustained strong consumer sentiment. Also, the continuous expansion of inbound tourism would render further support.

Further information

The volume of retail sales is derived from the value of retail sales after adjusting for price changes. The relevant components of the Consumer Price Index are used as deflators.

Table 1 presents the revised figures on value index and value of retail sales for all retail outlets and by type of retail outlet for June 2006 and the provisional figures for July 2006, with average retail sales from October 2004 to September 2005 taken as 100.

Table 2 presents the revised figures on volume index of retail sales for all retail outlets and by type of retail outlet for June 2006 and the provisional figures for July 2006, with average retail sales from October 2004 to September 2005 taken as 100.

Table 3 shows the movement of the volume of total retail sales in terms of the year-on-year rate of change for a month compared with the same month in the preceding year based on the original series, and in terms of the rate of change for a three-month period compared with the preceding three-month period based on the seasonally adjusted series.

Giordano boss stake rose during takeover bid: SFC
Prudence Ho
Hong Kong Standard
Wednesday, September 06, 2006

Market regulator the Securities and Futures Commission is concerned that Giordano International (0709) chairman Peter Lau Kwok-kuen further increased his shareholding in the company between June 6 and June 23, the period when Japanese apparel retailer Fast Retailing had bid for Giordano, sources said.

Lau could not be reached for comment Tuesday. A spokesperson for the SFC also declined to comment.

Giordano chief Lau first began increasing his stake in the casualwear retail chain June 6, a notice posted on the Hong Kong Exchanges & Clearing Web site shows. Lau's transaction was made on the same day Fast Retailing first approached the Hong Kong company.

Lau continued to buy shares until June 23 at an average price of HK$3.50, raising his shareholding to 1.62 percent from 1.52 percent.

Fast Retailing said Monday it held two meetings with Giordano management June 21 and July 25.

Trading in Giordano shares was suspended Friday, August 4, when interest expressed by Fast Retailing in Giordano was reported by the Hong Kong media.

Following this, Giordano shares surged 18 percent to HK$4.80 on August 7, when the company resumed trading amid takeover expectations. But Fast Retailing announced Monday it is no longer interested in Giordano, citing overvaluation of the stock, and that Giordano management did not welcome its approach.

Shares of Giordano slumped as much as 16 percent Tuesday before recovering to close at HK$4.03, an 11.23 percent decline. Turnover amounted to HK$225 million.

An analyst at an European investment bank said Giordano's valuation suggests the stock is trading at premium, even after the price correction Tuesday, of 14 times 2007 earnings, much higher than its peer Bossini (0592) at seven times earnings.

In the first six months, Giordano's profit fell 19.3 percent to HK$151 million.

Operating margin declined from 11.4 percent to 9.1 percent.

Hong Kong's retail sales grow in August boosted by consumer confidence, tourism
3 October 2006

HONG KONG (AP) - Hong Kong's retail sales growth accelerated in August, the government said Tuesday, amid strong consumer confidence and vibrant tourism.

The value of retail sales in August rose 8.3 percent from the same month last year to HK$17.9 billion, the Census and Statistics Department said.

The increase came amid a boost in consumer confidence caused by an improving job market, a rise in household income and a pause in U.S. interest rate hikes, the government said.

Another factor boosting retail sales figures was a pickup in tourism. Tourist arrivals reached an all-time high of 2.35 million in August, bringing the number of visitors so far this year to 16.74 million.

DBS Group Holdings Ltd. economist Connie Tse said she expects the strong growth to continue the rest of the year.

"Domestic consumption is expected to hold up, given the optimistic labor market outlook and a likely peak in lending rates," Tse said.

Harbour City sees double-digit growths in retail sales
Apple Daily News
26 October 2006

Harbour City in Tsim Sha Tsui has seen double-digit growths in sale revenue in the first nine months of 2006. With the coming Christmas and New Year season in December, Harbour City plans to spend 30% more resources on promotion.

In the first nine months of the year, Harbour City had a 13-25% growth in sale revenue each month. In July alone, the average retail sale value per square foot (psf) of retail space topped HK$950. Retail sale value slowed down to HK$885 psf in August and HK$750 psf in September with the back-to-school season. However, for the third quarter of the year, sale revenue still jumped nearly 20% from the same time in 2005.

Among all types of stores at the shopping mall, jewellery and watch retailers recorded the strongest growth in business due to the buoyant stock market and local economy. In the third quarter, jewellery and watch retailers had sale revenue of nearly HK$10,000 psf, up 50-60% from the same time last year. Cosmetic retailers and leatherware retailers also reported a 20-30% surge in sale revenue.

For October and Halloween, Harbour City plans to spend HK$100,000 on decoration and promotion. It expects to see a 15% jump in retail sale value to HK$800 psf. Visitor flow to the shopping mall over the Halloween holiday is also expected to rise 12-15% to an average of 220,000 person-time a day.

Provisional Statistics of Retail Sales for September 2006
Government Press Release
Thursday, November 2, 2006

Source & tables :
http://www.info.gov.hk/gia/general/200611/02/P200611020148.htm

The Census and Statistics Department (C&SD) released the latest figures on retail sales today (November 2).

The value of total retail sales in September 2006, provisionally estimated at $16.9 billion, increased by 7.5% over a year earlier. After netting out the effect of price changes over the same period, the volume of total retail sales increased by 5.8% in September 2006 over a year earlier.

The revised estimate of the value of total retail sales in August 2006, at $17.9 billion, increased by 8.4% over August 2005, while the volume of total retail sales increased by 6.4%.

Taking the first nine months of 2006 together, total retail sales increased by 6.8% in value or 5.6% in volume over the same period a year earlier.

Analysed by type of retail outlet and comparing September 2006 with September 2005, the volume of sales of footwear, allied products and other clothing accessories increased the most, by 12.9%. This was followed by sales of motor vehicles and parts (+12.7% in volume); electrical goods and photographic equipment (+12.4%); furniture and fixtures (+10.5%); commodities in department stores (+9.7%); fuels (+7.7%); wearing apparel (+7.2%); food, alcoholic drinks and tobacco (+6.1%); miscellaneous consumer goods (+6.0%); and commodities in supermarkets (+0.2%).

On the other hand, the volume of sales of miscellaneous consumer durable goods and of jewellery, watches and clocks, and valuable gifts decreased by 2.0% and 0.9% respectively in September 2006 compared with a year earlier.

Based on the seasonally adjusted series, the volume of total retail sales increased by 1.4% in the third quarter of 2006 compared with the preceding quarter.

These retail sales statistics are primarily intended to measure the sales receipts of goods sold by local retail establishments, for gauging the short-term business performance of the local retail sector. They cover consumer spending on goods but not on services. Moreover, they include spending on goods by visitors in Hong Kong but not by Hong Kong residents outside Hong Kong. Hence they should not be regarded as a comprehensive indicator of overall consumer spending. In this context, it may be noted that the share of consumer spending on services in overall consumer spending has been increasing over time.

Users interested in the trend of overall consumer spending should refer to the quarterly series of private consumption expenditure (PCE), which is a major component of the Gross Domestic Product. Compiled from a wide range of data sources, PCE covers consumer spending on both goods (purchased from all channels) and services by Hong Kong residents whether domestically or abroad.

Commentary

A Government spokesman pointed out that the volume of total retail sales maintained notable growth in September over a year earlier, signifying the continued strength in local consumption spending on a wide spectrum of goods including both essential items and durable goods. This was on the back of the improving employment situation, pause in US interest rate hikes and the positive wealth effect stemming from the buoyant stock market performance. Looking ahead, thriving local consumption and inbound tourism should continue to bode well for local retail business.

Further information

The volume of retail sales is derived from the value of retail sales after adjusting for price changes. The relevant components of the Consumer Price Index are used as deflators.

Table 1 presents the revised figures on value index and value of retail sales for all retail outlets and by type of retail outlet for August 2006 and the provisional figures for September 2006, with average retail sales from October 2004 to September 2005 taken as 100.

Table 2 presents the revised figures on volume index of retail sales for all retail outlets and by type of retail outlet for August 2006 and the provisional figures for September 2006, with average retail sales from October 2004 to September 2005 taken as 100.

Table 3 shows the movement of the volume of total retail sales in terms of the year-on-year rate of change for a month compared with the same month in the preceding year based on the original series, and in terms of the rate of change for a three-month period compared with the preceding three-month period based on the seasonally adjusted series.

Hong Kong's October retail sales up 6.9 percent on year
1 December 2006

HONG KONG (AP) - Hong Kong's retail sales in October grew 6.9 percent from a year ago to 17.8 billion Hong Kong dollars (US$2.3 billion; €1.7 billion), the government said Friday.

A government statement said retail sales volume rose by 5.2 percent over the same period.

Among the sectors to experience the most retail sales volume growth in October were cars and car parts, which grew 27 percent, and food, alcohol and tobacco, which rose 14.5 percent.

Electrical goods and photography equipment jumped 12.9 percent in sales volume and footwear and related products gained 8.2 percent.

The government statement said "prevailing consumer sentiment remains buoyant, thanks to rising household incomes, lower interest rates and the positive wealth effect from the recent stock market boom," adding that consumption is expected to remain steady.

Hong Kong retailers ring in 7.4 percent sales increase in November

HONG KONG, Jan 2, 2007 (AFP) - Retail sales in Hong Kong, a barometer of consumer habits and an indicator of the strength of the economy, rose 7.4 percent year-on-year in November, led by electrical and photographic goods, a government statement said Tuesday.

The value of retail sales were estimated at 17 billion Hong Kong dollars (2.179 billion US dollars), while the volume of sales rose 4.8 percent.

The revised estimate for October was 17.8 billion dollars by value, up 7 percent year-on-year, and up 5.2 by volume.

Sales of electrical and photographic equipment leapt almost 12 percent by volume, while sales of cars and car parts rose 8.3 percent.

Decliners included sales of consumer durable goods, down 3.6 percent, and clothing, which slipped 1.9 percent.

In the first 11 months of 2006, total retail sales increased 6.9 percent in value and 5.5 percent in volume over the same period a year earlier.

Hong Kong's retail sales soar in December

HONG KONG, Feb 1, 2007 (AFP) - Hong Kong's retail sales soared 11.5 percent in December to 21.5 billion Hong Kong dollars (2.76 billion US), supported by rising employment income and an improved economy, an official said Thursday.

The stock market boom should have also lifted consumer sentiment further during the festive season in December, as evidenced by the sharp increases in sales of motor vehicles and other valuable goods," a government spokesman said.

He said the distinct rebound in inbound tourism in that month was another contributory factor to the sharp increase.

Retail sales rose 7.4 percent in November to 17.0 billion dollars.

For full year 2006, total retail sales grew 7.3 percent over the 2005 levels.

Looking ahead, the spokesman said the favourable macroeconomic environment and the upbeat consumer sentiment should continue to render support to retail business.

Esprit set to open up 5.42 pct after strong H1 results

HONG KONG, Feb 8 (Reuters) - Shares in Esprit Holdings Ltd. were set to open up 5.42 percent on Thursday, a day after it posted a 28 percent rise in first-half earnings.

The company reported a net profit of HK$2.4 billion (US$308 million) in the six months ended December, matching expectations for HK$2.4 billion -- the mean consensus of seven analysts polled by Reuters.

That result compares with a previously reported HK$1.87 billion a year ago.

Esprit's shares were set to open at HK$87.50 on Thursday.

Merrill Lynch raised the target price of the global retailer to HK$100, citing the strong interim earnings. The bank raised its price target by 12.5 percent from HK$88.90, by "rolling forward 6 months to FY08E and lifting our target multiple from 18 times to 20 times," the bank said in a note dated Feb. 8.

Shares in Esprit rose 37 percent in the final six months of 2006, outperforming a 23 percent gain in the benchmark Hang Seng Index <.HSI>.

The firm's stock closed down 0.12 percent on Wednesday at HK$83.00.

Esprit plans 400 new stores

Prudence Ho
Thursday, February 08, 2007

Esprit Holdings (0330) has announced plans to open more than 400 stores worldwide over the next three years, after reporting a 28 percent rise in interim profit.
The company said Wednesday that it will make an annual investment of between HK$1 billion and HK$1.5 billion to develop the new stores.

The apparel giant recorded a profit of HK$2.4 billion for the six months to December 31. If the euro appreciation over the same period is discounted, the company's profit increase was about 23 percent, well within the market expectations of 17 to 33 percent.

Espirit's turnover rose 23.4 percent to reach HK$14.59 billion. Earnings before interest and tax margin increased 0.6 percent to 21 percent, while net profit margin was up 0.6 percent to 16.4 percent. The company declared an interim dividend of 70 HK cents per share.

"The surprise is that its retail business performed better than market estimates," said Theresa Lo, an analyst at BOC International.

The retail division, which accounts for 44 percent of sales, surged 32.8 percent during the period, while same- store sales growth was more than 20 percent. Same stores are defined as those which have been open for more than a year.

Esprit's plans to open another 400 stores worldwide will take the number of stores from the current 640 to more than 1,000.

In order to implement a multi-brand strategy, Esprit started to open standalone "edc" stores 18 months ago, and the company now has between 40-45 such stores worldwide. Edc is the secondary brand under the Esprit label targeting younger customers. Sales for this brand now accounts for 19 percent of worldwide sales. "One third of the new stores will be standalone edc stores," said John Poon Cho-ing, deputy chairman and group chief financial officer.

The wholesale division, which accounts for about 55 percent of total sales, is also experiencing a healthy growth. Poon said there was a 10 percent to 15 percent increase in local wholesale orders for the first five months of 2007. Heinz Krogner, chairman and group CEO, said Esprit would maintain its target sales growth of 20 percent per year over the next five years. Net profit margins would be 15 percent per year over the same period.

Poon said the hike in the value- added tax in its key German market had not affected their business, adding that January sales in Germany had recorded double-digit growth. Germany increased VAT from 16 percent to 19 percent at the start of the year.

Poon also said the eagerly awaited new Asia Pacific president will be appointed in the second half of the year.

Shoppers flash the cash as Year of the Pig looms
17 February 2007
South China Morning Post

Shoppers swamped flower fairs and stores to bag last-minute bargains yesterday as they made their final preparations for the arrival of the Year of the Pig.

Many restaurants were expecting turnover to rise 20 per cent over last year. Diners were more willing to pay for high-end dishes, they said, attributing the change in sentiment to the economic recovery.

Families will gather today, the last day of the Year of the Dog, for a traditional reunion dinner.

Simon Wong Ka-wo, chairman of the Hong Kong Federation of Restaurants and Related Trades, said some eateries had been fully booked for several days.

"More diners are opting for high-end dishes like abalone. Companies are also booking tables to treat their staff," Mr Wong said.

Restaurateur Wu Ka-chun, of Hoi Tin (Asia) Harbour Restaurant in Causeway Bay, said he expected a 20 per cent increase in turnover.

"Set dinners priced HK$3,000 to HK$4,000 a table are the most popular," he said.

But the outlook for the catering industry was not altogether bright, said Liberal Party lawmaker Tommy Cheung Yu-yan, who represents the catering sector. He said many restaurants were struggling to cope with increasing rents and wages.

In the shopping precincts of East Point Road and Great George Street in Causeway Bay, shops were decked with red banners reading "Chinese New Year clearance".

Shoe shops were gearing up for a late spending spree. Many people do not buy shoes in the first month of the Lunar New Year because they believe it brings bad luck.

Elsewhere, Victoria Park was carpeted with a sea of people hunting for bargains at the city's biggest flower fair. Shoppers packed and lingered outside makeshift stalls, bargaining loudly.

But Amy Leung, of Fragrant Florist, said business was just so-so.

"Many people say the economy has improved. I did not see it. People keep bargaining and the profit is small," she said.

But another florist, Wong Ming, said: "Some big peach blossom trees can be sold for almost HK$2,000 each - more than 50 per cent up from last year."

One of the highlights of the four-day holiday will be the International Chinese New Year Night Parade Float in Tsim Sha Tsui from 8pm tomorrow. On Monday, the annual fireworks display kicks off at 8pm.

Landlords make the most of shopping bonanza
20 February 2007
South China Morning Post

Landlords of major shopping centres have pulled out all the stops, including shelling out tens of millions of dollar on promotional campaigns and extending business hours, to cash in on what they anticipate to be their best Lunar New Year since 1997.

They are eager to make the most of the month-long festival shopping season - the peak of which traditionally runs from a few days before the New Year to its 10th day - after a year that has seen the city's main stock market index rise by more than 30 per cent, generous year-end bonuses and salary rises, and the appreciating yuan, making items here more affordable for spendthrift mainland tourists.

According to the Institute of Human Resources Management, workers this year received their highest salary increase since 2002, an average rise of 2.4 per cent, compared with 1.7 per cent last year.

For what is generally the second-most lucrative season after Christmas, Sun Hung Kai Properties, Sino Land and Wharf Group, the city's three largest mall operators, have boosted their promotional budgets by as much as 50 per cent from a year ago, providing a slate of free entertainment, from aerobatic shows, traditional Chinese music and western-style piano recitals to Chinese art and fortune tellers.

"This Chinese New Year will probably register the best sales in a decade," said Maureen Fung Sau-yim, general manager at Sun Hung Kai Real Estate Agent, the leasing arm of SHKP. It increased its promotional budget by 25 per cent over last year, to HK$8.2 million, at 11 of its major malls, including Tai Po Mega Mall in Tai Po and The Sun Arcade in Tsim Sha Tsui.

In addition, it is spending HK$8 million at it flagship APM mall in Kwun Tong, up 20 per cent from a year ago, on events including recitals of the Guqin, a Chinese zither, and piano, as well as acrobatics, and traditional dances. The developer hopes that between January 17 and February 27, sales at APM will be 20 per cent higher than last year to HK$310 million - or more than 10 per cent of its entire year's income - by attracting 9.3 million shoppers. APM generated HK$3 billion in sales for the whole of last year.

Luxury goods retailers, such as those selling watches, jewellery and designer labels, have already recorded brisker sales during this period. "Our tenants told us visiting Beijing and Shanghai shoppers bought four watches each last week costing about HK$20,000 to HK$30,000, rather than one during regular times," she said. "Some shops are nearly sold out."

Sino Land's Tuen Mun Town Plaza in Tuen Mun, which targets local middle-income consumers, increased its marketing budget for this year by 50 per cent to HK$6 million. It also extended the opening hours to midnight last week, and opened 24 hours in the two days before Lunar New Year.

Ronnie Chan Yam-ling, general manager of Tuen Mun Town Plaza, expects sales at the mall will reach HK$400 million this month, up 15 per cent from a year ago.

"We have seen a stronger spending mood this year, with average purchase between HK$3,000 and HK$10,000 per visit," she said.

Karen Tam, promotion and advertising senior manager at Wharf's subsidiary Harbour City Estates, which is responsible for leasing and management of Hong Kong's largest shopping mall, the two million square foot Harbour City in Tsim Sha Tsui, hopes sales will increase 10 per cent for the holiday season, after it invested HK$5 million to hail the arrival of the Year of the Pig.

"We have seen most shops selling designer labels packed with people," she said.

For the shopping centres, more shoppers translate directly to the bottom line, since the rental contract gives the landlords the right to charge either a base rent or turnover rent, whichever is higher.

"They normally charge 15 per cent on tenants' average sales as turnover rents. So, the more business the tenants can generate, the more rents landlords will receive," said Helen Mak, a retail service group senior manager at property consultant Colliers International. In addition, by boosting retail sales, the landlords can raise rents, which already are at all-time highs in many areas.

She forecasts retail rents will increase 15 to 25 per cent for leases due for renewal this year.

"International retailers are continuing to look for shops in Hong Kong where the retail industry should benefit from the 2008 Beijing Olympics," she said.

Times Square rents to rise after bumper sales
23 February 2007
South China Morning Post

Wharf (Holdings), a major landlord in Hong Kong, may raise rents at its Times Square shopping centre in Causeway Bay by 10 per cent to 12 per cent after tenants reported the best Lunar New Year sales.

Leng Yen Thean, general manager of Times Square, said tenants earned sales of more than HK$1,000 per square foot between the eve and the third day of the Lunar New Year.

"It is the best Lunar New Year since the shopping centre opened 13 years ago," Ms Leng said after a lion dance performance at the complex to mark the beginning of the Year of the Pig.

However, the sales figure was still lower than the record HK$1,200 per square foot achieved during the Christmas holiday period last year, Ms Leng said.

As tenants were able to generate 10 per cent to 12 per cent year on year growth in sales during Lunar New Year, she said rents would increase at the same pace.

At present, tenants at Times Square pay HK$40 to HK$450 per square foot.

Other large-scale shopping centres also reported higher sales during the holiday period.

Maureen Fung Sau-yim, general manager at Sun Hung Kai Real Estate Agency, the leasing arm of Sun Hung Kai Properties said its APM mall in Kwun Tong generated HK$110 million during the period, up 22 per cent from a year ago.

Sales at Sino Land's Tuen Mun Town Centre are expected to rise 15 per cent to more than HK$400 million for this month, according to the shopping centre's general manager Ronnie Chan Yam-ling.

Meanwhile, retail rents at New World Centre in Tsim Sha Tsui, New World Development's key shopping centre, increased 10 to 40 per cent last year.

The shopping area recorded double-digit growth in visitors last year, according to Raymond To, the acting general manager of Hong Kong Island Development, a subsidiary of New World Development.

Visitors to the shopping centre rose about 50 per cent during the Lunar New Year holiday, compared with the same period last year, he said.

H&M entry to shake up apparel retail sector
Mass-market players already reeling from falling sales may bear the brunt
26 February 2007
South China Morning Post

The arrival in Hong Kong next month of aggressively expanding apparel retailer H&M of Sweden could have a big impact on some local retailers that are already reeling from shrinking profitability.

In preparation for the opening of two stores in Hong Kong, H&M is rolling out its big marketing guns, placing conspicuous billboards featuring Madonna, its pop-star endorser, around town. The singer's clothing and accessories line, M by Madonna, will be on sale in Hong Kong from next month.

H&M has leased 40,000 square feet in Lane Crawford's former flagship store in Queens Road Central and 10,000 sqft at Kowloon Station's Union Square shopping centre.

Property agents estimated that H&M would pay about HK$100 per square foot per month to rent its Queens Road location, a reasonable price for a shop in a prime area. At Union Square, a non-core area, the rent is closer to HK$50 per square foot.

Heinz Krogner, chairman of Esprit Holdings, probably knows H&M better than any of his Hong Kong-based rivals. Esprit and H&M compete in Germany, which is the biggest revenue generator for both chains.

He said he was not concerned about H&M stealing sales from his firm in Hong Kong, which is Esprit's key Asian market and where it sells higher-end goods. He said Giordano International was more likely to bear the brunt of the new competition.

Giordano derived 20.8 per cent of its sales from Hong Kong in the January to June period last year while Bossini made 52.7 per cent of its sales here in the first half.

Already struggling with slower sales due to a warmer than expected winter, Giordano is likely to pay higher taxes on its mainland operations in future. It issued a profit warning this month, saying it would need to increase tax provisions after mainland tax authorities demanded changes to its transfer pricing arrangements. Sources said the provision could cut full-year earnings by HK$70 million.

For Bossini, Hong Kong is important since the profit it made here offset its losses in the mainland and Taiwan in the first half of last year. Bossini's first-half earnings dived 85.8 per cent to HK$6.41 million, hit by intensifying competition and higher rental and staff costs.

Although confident of Esprit's ability to maintain an edge over H&M in Hong Kong, Mr Krogner admitted that many of its Hong Kong stores were too old and needed revamping. Esprit was looking to open its first flagship store here, most likely in Central. With better store layouts, sales in Hong Kong could be up 30 per cent, he said.

Founded in 1947, H&M had 1,346 stores in 24 countries as of last month. Its stated aim is to offer products that are affordable yet contemporary and of high quality. Its expansion strategy is to increase its store numbers by 10 per cent to 15 per cent a year. H&M said in its latest interim report that in addition to Hong Kong it would open stores in Shanghai this year and in Tokyo next year.

Analysts say the arrival of the Spanish retailer Zara, which has four Hong Kong stores, in 2004 has already given local people a taste for larger stores, to which the local garment chains have been struggling to respond.

Giordano recently converted some of its larger outlets into "concept stores" with posher interiors and more expensive products.

Not all analysts are convinced the strategy is working. Anne Ling, a Deutsche Bank analyst, said in a research report the idea "still needs to be fine-tuned".

Marisa Ho, of Credit Suisse, wrote that Giordano's challenge was consumer education and acceptance of the "new Giordano" with its niche designs.

Giordano spokesman William Yue said the company was making progress. "The success we have had in growing Giordano Ladies clearly shows that it is possible for us to push the Giordano brand upmarket," he said.

"This is further borne out by the initial success we have had in boosting both the average ticket value and average selling price of Giordano Concepts."

Bossini chief executive Kathy Chan said that although she did not see H&M as direct competition, the Swedish brand's entry would nevertheless have an impact because "the mass apparel market in Hong Kong has little room for growth".

She said the company's rebranding campaign targeting the youth market would cost more than HK$20 million but she declined to give details.

Bossini "is embarking on a total revamp of the brand", a JP Morgan research report said: "This would involve setting up a flagship store in Mong Kok, new look at the stores, increasing the fashion element of the brand and raising the average sales prices, increasing collections from eight to 12 per annum.

"This move has the risk of increasing the cash burn and further eroding" near-term profitability.

I.T, a local retailer which usually targets middle-class consumers, in November launched two new brands, apparel line Chocoolate and shoe line Venilla Suite, at prices below what it usually charges.

"We are worried that both brands are positioned in the over-crowded mid-priced segment," a JP Morgan research report said.

Casual wear retailer U-Right International Holdings has grown to 65 stores in Hong Kong, from only 18 in September 2005, and aims to have 100 stores in the territory next year.

Lifestyle profit beats forecasts
Sogo operator optimistic about Shanghai outlet as investment gains boost income by 37pc to HK$740m
28 February 2007
South China Morning Post

Lifestyle International Holdings, the operator of Sogo department stores, reported a better than expected 37.23 per cent rise in annual profit on higher investment gains and expects its Shanghai outlet to make a profit for the first time this year.

Net profit jumped to HK$740.17 million, or 87.4 HK cents per share, for the year to December from HK$539.38 million, or 69.4 HK cents per share, a year earlier. Sales grew 21 per cent to HK$2.53 billion.

Its profit beat Deutsche Bank's estimate of between HK$686 million and HK$711 million and Macquarie's HK$697 million.

Last year's earnings were partly lifted by a surge in investment income to HK$67.1 million from HK$1.88 million a year earlier, fuelled by the stock market rally. The company invested HK$670 million in index-linked notes and Hong Kong-listed stocks.

However, shares in Lifestyle, which have risen 103 per cent in the past 12 months, fell 0.4 per cent yesterday to HK$24.95.

CIMB, Malaysia's second-largest bank, said in a report this month that the shares were overpriced.

Sales at its Shanghai store, which opened at the end of 2004 under the Jiuguang brand, climbed 45 per cent last year and accounted for 14.8 per cent of the company's total sales, up from 12 per cent a year earlier.

"We expect Shanghai Jiuguang to make a profit this year. Indeed, it has been profitable since January this year," Lifestyle managing director Thomas Lau Luen-hung said.

Jiuguang made a net loss of less than HK$10 million in the first half, compared with a HK$30 million loss a year earlier.

Average sales per ticket in the Jiuguang store, at Shanghai's prime shopping street Nanjing Road, rose to 230 yuan from 215 yuan.

Mr Lau said the company's growth driver would be its mainland projects.

Lifestyle bought a 56,000 square metre site in Shenyang's Shenhe district for 1.02 billion yuan in December and plans to develop it into a department store. The gross floor area of the store, due to open in 2009, will be about 310,000 square metres, similar to that of Jiuguang.

It also took a 50 per cent stake in a US$100 million shopping centre and office project in Suzhou that it will jointly develop with the local government.

"We want to own 100 per cent of the Suzhou project, but the local government has indicated the interest in taking a stake. I think in the end, they may own 10 per cent or 15 per cent," Mr Lau said.

The project, which has a gross floor area of 168,000 square metres, will have a soft opening in the fourth quarter of next year.

Lifestyle's flagship Sogo store in Causeway Bay, which accounted for 78.4 per cent of its sales, saw 11.3 per cent sales growth. Average sales per ticket were HK$436, up from HK$396.

The company declared a final dividend of 21 HK cents for last year. Together with the 14.5 HK cent interim dividend it has paid, the payout ratio was 50 per cent.

Sales drop in January blamed on skewed data
Hong Kong Standard
Friday, March 02, 2007

Hong Kong's retail sales in January totalled HK$20.9 billion, a 1.3 percent decline in value from the same month last year because of distortion created by the Lunar New Year, the government said Thursday.

Sales volume dropped 4.8 percent year on year. Volume was down from the 11.6 percent rise in December 2006 from December 2005.

Despite the negative growth recorded in January, economists expect consumer sentiment to remain strong this year on continued robustness in the local economy, as well as the wealth effect created by tax relief measures proposed in the government's 2007-08 budget.

The Census and Statistics Department said January's year- on-year comparison was affected by the timing of the Lunar New Year, which fell on February this year but in January in 2006.

Due to greater volatility shown by retail sales in the first two calendar months, economists say it would be more appropriate to compare the retail sales figures for January and February taken together.

"It is not a big surprise. The Chinese New Year effect is quite significant. It could lead to negative growth in the particular months," said Jun Ma, chief economist for the Greater China region at Deutsche Bank "That's why I would not give too much attention to this figure yet."

Ma predicted the tax-relief measures proposed by Financial Secretary Henry Tang Ying-yen Wednesday will boost private consumption by 1.6 percentage points this year.

Citigroup predicted private consumption would rise by about 2percent this year from HK$860 billion in 2006 due to the projected increase in household disposable income.

In his budget, Tang said he would rebate half of the salaries tax people paid on 2006-07 income - with a maximum ceiling of HK$15,000 - in addition to restoring the marginal tax rates and band to 2002-03 levels.

He also proposed to waive the property tax for the first two quarters of fiscal year 2007-08 up to HK$5,000 for each quarter.

"With its positive impact on consumption, the 2007-08 budget increases our confidence that strong domestic demand, together with buoyant finance and business services, will keep Hong Kong's economic growth strong," Citigroup said.

It predicted economic growth of 6 percent this year, higher than government's forecast of 4.5 percent to 5.5 percent.

http://the-sun.on.cc/channels/ent/20070304/img/se01030414_big.jpg

^^^ Where is that H&M?

The article above mentioned a store in Central on Queen's Road Central and one in Kowloon Station. But the one above doesn't look like either one to me. And when is it going to open??

They need to use some local models and not ones from Scandinavia. H&M is taking over the world.

^^So it was Madonna, I couldn't tell.

http://farm1.static.flickr.com/182/417531400_9e885f1fd1_o.jpg


http://farm1.static.flickr.com/165/417530042_9d007ebed8_o.jpg

"More than 1,000 people queueing outside the shop waiting for the 11:00am opening. Some had camped out for more than 24 hours."
http://farm1.static.flickr.com/127/417530161_0ea1b0a986_o.jpg

Lots of pics of the grand opening here:
http://hkdigit.blogspot.com/2007/03/h-grand-opening-in-hong-kong.html

^^^ Where is that H&M?

The article above mentioned a store in Central on Queen's Road Central and one in Kowloon Station. But the one above doesn't look like either one to me. And when is it going to open??

That H&M store is the former Lane Crawford flagship store in Central before it moved to its current flagship location in the IFC mall.

Retail sales growth slows
Hong Kong Standard
Friday, May 04, 2007

Hong Kong's retail sales increased at a slower-than-expected pace in March as stock market volatility and a slowdown in tourist arrivals during the month led to lower spending on luxury goods, the government said.

The value of sales climbed 5percent year on year to HK$18.9 billion in March, from a revised 28.6 percent in February and 11.6 percent in the first two months, the Census and Statistics Department said Thursday.

By volume, after excluding the effects of rising prices, retail sales increased 3.5 percent in March, well below economists' projections.

Sales moderated because of a "fall-off" in purchases at supermarkets and sales of motor vehicles, which are volatile from month to month, a government spokesman said in a statement.

He added that share market volatility from end February to most of March, as well as the slowdown in inbound tourism, also led to lower spending on luxury items such as jewelry and watches.

In the first quarter, retail sales picked up, rising 9.4 percent year on year in value and 6.6 percent in volume over the same period last year.

Despite the marked slowdown in March, sales are expected to remain robust, but a slowdown in visitor arrivals poses a risk, economists said. "This is only a one-month figure, which can be quite volatile. But overall, Hong Kong's fundamentals are still sound with the equity market and job market doing quite well," said Bank of East Asia chief economist Paul Tang Sai-on. "I'd be surprised if things go any worse than this."

JPMorgan Chase economist Qian Wang said domestic demand is "holding up" but a tourism slowdown could pose a risk to sales. She said that on the first day of the Golden Week "people were already saying that tourist arrivals from the mainland fell by about 10 percent compared to last year."

Retailer Giordano soars, denies stake sale talk

HONG KONG, June 4 (Reuters) - Shares in Giordano International Ltd. jumped more than 11 percent on Monday, valuing the fashion retailer at up to US$790 million, on speculation three rivals were vying for a stake in the company.

The South China Morning Post reported over the weekend that Hong Kong-listed Esprit , Spain's Zara and Tokyo-listed Fast Retailing want to buy a stake in Giordano to increase their exposure to fast-growth China. The newspaper quoted unnamed sources.

Giordano has 1,700 outlets across Asia, including more than 700 in China -- a network that attracted interest from Fast Retailing last year before the operator of the Uniqlo casualwear chain dropped the idea.

Giordano shares hit a two-month high of HK$4.12 on Monday. By midday, the stock was up 9.5 percent, outpacing a 1 percent gain on the blue-chip Hang Seng Index <.HSI>.

Giordano spokesman William Yue reaffirmed on Monday a denial that the retailer was in talks with any of the three rivals, issued after its shares had gained more than 16 percent in the three sessions to Friday's close.

"We have nothing to add whatsoever," Yue said.

The firm had issued a statement to the Hong Kong stock exchange saying "there are no negotiations or agreements relating to intended acquisitions or realisations."

Fast Retailing spokesman Terunobu Aono said he could not confirm whether his firm was looking to take a stake. "I cannot comment either way," he said.

Esprit, the world's fifth-largest fashion retailer, was not immediately available for comment.

China's fashion retail market is booming alongside changing lifestyles and income growth. Retail sales in general are expected to grow 14.7 percent in 2007.

BACK IN THE SADDLE

In September, Fast Retailing pulled out of a bid for a stake in Giordano, citing the target's falling profits and lack of enthusiasm for a deal. The Japanese firm also said it did not believe Giordano's stock price reflected fundamentals.

The stock has risen as much as 23 percent since Wednesday, driven partly by speculation of an acquisition offer.

Analysts have long speculated that Giordano is a candidate for a takeover. The Hong Kong-based retailer has no single major shareholder, but the top five control nearly 51 percent and management owns less than 3 percent.

Aberdeen Asset Management Asia Ltd. and JPMorgan Chase are among its top shareholders.

Esprit, which derives more than four-fifths of its revenue from Europe and about half its sales in Germany alone, was an early entrant to China's retail market through a joint venture with China Resources Enterprise Ltd. that operates around 600 outlets -- and counting.

Zara, owned by Inditex -- Europe's biggest fashion retailer -- expects to invest the bulk of around 900 million euros ($1.2 billion) in 2007 capital expenditure on about 480 new stores, up from 439 last year, officials have said.

Inditex expects to open around 15 stores in China. Chinese store openings should spike in 2008 after an aggressive location hunt, the firm told Reuters last week.

All face competition from Swedish fashion chain Hennes & Mauritz and Hong Kong-listed Bossini . U.S. rival Gap Inc. has yet to set up shop in China. (Additional reporting by Nathan Layne in TOKYO)

New malls repackage Kowloon Bay into retail zone
MegaBox, EMax boast family attractions
30 May 2007
South China Morning Post

When thinking of shopping, dining and night entertainment, Kowloon Bay never comes to anyone's mind.

For the past two decades, Telford Plaza, owned by MTR Corp, has been the only major shopping centre in the area. But it will not be so from next month.

Armed with a long list of international retail tenants, Kerry Properties will open its 1.1 million square foot MegaBox, the biggest mall in Kowloon East, on June 7.

A month later, Hopewell Holdings will open its new 900,000 square foot shopping and entertainment complex, EMax. The mall boasts the largest bowling alley and household exposition hall in Kowloon East.

"Competition is getting fierce in Kowloon East," said Jeannette Chan, the regional director of the retail department at Jones Lang LaSalle.

To avoid direct competition, Telford Plaza had repositioned itself to cater to office ladies rather than family shoppers by signing on a growing number of fashion stores, Ms Chan said.

"Three years ago, retailers were hardly looking at Kowloon Bay. Now, the area's retail rents have shot up a lot since the significant makeover from a traditional industrial area into an office, retail and entertainment area," she said.

Tenants were charged HK$80 to HK$100 per square foot at the soon to open HK$2 billion MegaBox at Wang Chiu Road, which should set a new benchmark in the retail rental market there, Ms Chan said.

Colliers International research director Simon Lo Wing-fai said the market would also focus on Kowloon Bay as the most successful of the new malls would set a new development phase for the area. "For the past decade, it has been the largest supply of retail space we have ever seen in Kowloon East," he said.

As the 19-storey MegaBox's vertical concept is new to Hong Kong, it was too early to assess performance, Mr Lo said. "But such big-box retail concepts are very popular in western countries. We still have to observe the shopper traffic before jumping to a conclusion."

Location is a crucial factor to the success of a shopping centre. To increase accessibility, Kerry and Hopewell will provide shuttle buses for visitors commuting between their malls and the Kowloon Bay MTR station.

"A fast and convenient transport plays an important role in bringing in shoppers there," Mr Lo said.

Czarina Man, the general manager for marketing at MegaBox Development, a subsidiary of Kerry, expressed confidence in MegaBox due to its family-driven retail attraction.

"The entry of new malls will draw more shoppers to Kowloon East. This should benefit each of the malls instead of creating direct competition. In addition, our mall is targeting a different customer group. Our unique concept will provide a shopping destination for the family," she said.

To build up its family-driven retail theme, MegaBox has attracted B&Q, a unit of British home improvement retailer Kingfisher, which occupies 120,000 square feet; Japan's largest electrical appliance retailer Best, which leases 40,000 square feet, and Australian do-it-yourself home improvement brand Spotlight, which takes up 40,000 square feet. The three shops will open this Friday.

The mall also features Hong Kong's first international-sized ice-skating rink and Imax Theatre, the largest single-storey "book city", and more than 30 restaurants.

About 92 per cent of the retail spaces had been leased at between HK$80 and HK$100 per square foot a month, Ms Man said.

"About 60 per cent of our tenants leased spaces of more than 10,000 square feet," she said, adding each of the remaining shops available for lease have 1,000 to 2,000 square feet of floor area.

Besides providing mass transport and 1,000 car parking spaces for mall visitors, Ms Man said MegaBox would also tap the area's growing working population, who would certainly boost the demand for retail and entertainment facilities.

Over the next several years, an additional three million square feet of grade A offices were scheduled to be completed, bringing the total stock to 9.5 million square feet, she said. "The amount of office spaces will exceed those in Tsim Sha Tsui East."

A spokesman for EMax said he was not concerned about MegaBox posing direct competition. More than 80 per cent of EMax's retail space had been committed at monthly rents of HK$20 to HK$50 a square foot, the spokesman said.

"We will have the 3,500-seat multi-function Star Hall for hosting concerts and Hong Kong's largest game centre which other malls do not have," he said. In addition, its 200,000 square feet of space will have 40 to 50 shops selling household items ranging from kitchenware to furniture.

Hopewell has invested HK$600 million to build the EMax shopping centre out of its Hongkong International Trade and Exhibition Centre in Kowloon Bay.

It's really surprising that Kowloon Bay would get these new malls especially since the area is mostly industrial. But if you go to Telford Plaza, there's so much pedestrian traffic... it feels like Mong Kok

Bossini blames overexpansion for profit dive
22 June 2007
South China Morning Post

Casual wear retailer Bossini International Holdings saw full-year earnings drop 81 per cent because of over-expansion on the mainland and in Taiwan and slowing sales.

Net profit plunged to HK$19.7 million or 1.26 HK cents per share for the year to March from HK$105 million or 6.69 HK cents per share in the previous year.

Sales fell 4.3 per cent to HK$2.1 billion while same-store sales recorded a 9 per cent decline.

"After experiencing sluggish sales in the third quarter, sales picked up gradually in the fourth quarter," Bossini said in a statement yesterday.

Earnings were hurt by a 6 per cent rise in operating costs to HK$954 million as a result of surging rentals and staff costs, it said. Gross profit margin remained at 47 per cent.

Owing to overexpansion, Bossini's operations on the mainland swung into the red while losses in Taiwan widened.

The company recorded an operating loss of HK$19.99 million on the mainland, against a profit of HK$6.52 million in the previous year. Losses in Taiwan widened to HK$39.75 million from HK$11.45 million.

The company had 359 directly managed outlets on the mainland, 111 in Taiwan and 38 in Hong Kong at the end of March. It also had 219 franchised outlets on the mainland.

It added 15 stores in the mainland last year and cut by one in Taiwan. This year, it plans to close 40 loss-making outlets in the mainland and 27 in Taiwan.

Chief executive Kathy Chan So-kuen said the retailer aimed to turn the loss-making operations on the mainland and Taiwan around by next year.

The company plans to double its outlets in Malaysia to 23 this year, as operations there "look set to be profitable in the long term", according to the statement.

Ms Chan has warned that the mass apparel market in Hong Kong had little room for growth and the retailer was embarking in a rebranding to fend off competition.

Bossini shares, which had risen 22.6 per cent in the past 12 months, edged up 1.56 per cent yesterday to 65 HK cents before the earnings announcement.

Harris Associates looks to sell Giordano stake-paper

HONG KONG, July 9 (Reuters) - U.S. investment firm Harris Associates is looking to sell its 14 percent stake in apparel firm Giordano International Ltd. as it is not happy with the company's earnings and dividends, the South China Morning Post reported on Monday.

Harris Associates, the second-largest single shareholder of Giordano, is interested in selling its stake if it receives an offer at least 50 percent above the current share price, the paper quoted David Herro, Harris' chief investment officer, as saying.

Hong Kong-based fashion retailer, Esprit Holdings Ltd. , Inditex's Zara and Tokyo-listed Uniqlo operator Fast Retailing have been considering taking a substantial stake in Giordano, one of Asia's largest clothing chains, the newspaper said.

Giordano's turnover fell nearly 1 percent in 2006 and net profit fell 49.5 percent from a year earlier.

Herro said Giordano's sales were lagging and margins are contracting and the company should distribute more cash to shareholders.

"There is excess cash in the balance sheet. We would like to see a net cash position, but with a smaller amount," he added.

Giordano has been vulnerable to a takeover after its founder Jimmy Lai sold his 27 percent stake in 1996, leaving the company without a key shareholder, analysts said.

Aberdeen Asset Management is the company's largest shareholder, holding 14.73 percent, according to the Hong Kong stock exchange.

Shares of Giordano closed Friday at HK$3.77. The stock has lost about 9.6 percent in the past three months.

Luxury is in the bag
2 August 2007
Daily Telegraph

Hong Kong is still the hot-spot for retail therapy, writes JEN MELOCCO

With 6.2 million people squeezed into an area two-thirds the size of Sydney, space in Hong Kong is at a premium. Only the most important activities can command any real square metres here. A stroll through Central, the city's CBD, quickly offers a clue as to what matters most to locals: shopping.

At every glance there are cathedrals to consumerism, with clothing stores dominating today.

Giant stand-alone shops, ranging from the fast-fashion discount chain H&M through to the latest flagship stores for luxury labels such as Gucci and Louis Vuitton, are multi-floored affairs which take up giant swathes of street front.

Gleaming shopping malls, such as the IFC in Central, house the city's most prestigious department store, Lane Crawford, and the city's largest branch of chic, Spanish chain store Zara. And until the end of August it is all on sale.

The sixth Hong Kong Shopping Festival runs until August 31, with shops open until 10pm every day and with discounts of up to 70 per cent, there is still plenty of time to hunt down a real fashion find.

In the past travellers returning from Hong Kong were most likely to be asked about the latest electronic gadgets. Today they are more likely to be grilled on the latest additions to their wardrobe.

H&M (68 Queens Rd, Central) is a shopping phenomenon even the locals are excited about. They were camped outside the huge store earlier this year in the lead-up to the opening and today are still hooked on the H&M experience.

The leading fast-fashion chain phenomenon originated in Sweden and has made its name by rushing the latest looks to shoppers at lowest possible prices.

While items are on sale, a discount is hardly needed as it is possible to buy hot summer tank tops drenched in tropical colours from about $14 ($HK99). The store is also a leader in celebrity-led ranges and the place to pick up our own Kylie's swimwear range.

Bikini tops range from $14. Fill up on fast fashions that will have a limited lifespan along with basics, such as T-shirts and cargoes, that won't break the bank.

International store Zara is the next stop for shoppers looking to fill their wardrobe with the latest looks.

This brand specialises in sophisticated pieces that are right on trend and Sydney women are longing to see it set up Down Under.

It's hard to find a better place for classics with a twist, such as gleaming white summer-style trenchcoats, sunny frocks and maxi dresses to take you through the approaching warmer weather in style. There are a number of Zara outlets in Hong Kong, but the store at the IFC Mall (8 Finance St), on the central waterfront is the biggest. IFC houses 200 stores ranging from Zara through to top-notch designers such as Valentino.

With gleaming white marble lined arcades it's a great place to check out what is happening around the world in fashion, even if you are not always buying.

Hong Kong's legendary department store, Lane Crawford, is also here and the place to pick up the world's best designer labels.

On the first day of sale season prices on top labels were already up to 50 per cent off. That put me in the market for a pair of Prada jeans, which were marked down to half price. European labels have a huge market in this designer-mad city with its ready supply of wealthy women. Have a peek at the luxury boutiques and see the tai-tais (the local term for a cashed-up wife of a local businessman) in action.

Louis Vuitton has more boutiques here than anywhere but Paris and Tokyo. The impressive flagship store (Shop 7-17 Landmark Atrium, Central) is a gleaming glass structure displaying top looks from the famous It bags through to the latest collections from Marc Jacobs.

The large Gucci flagship store (Shop G23-G30 Landmark Atrium, Central), which opened last November, has the total Gucci range in one very luxurious space.

If the designer bags are out of your price range, venture down to Milan Station (57 Percival St, Causeway Bay) to find the latest at prices that won't break the bank.

It sells pre-owned bags for a fraction of the original price.

----- NEED TO KNOW -----

Getting there: .... Virgin Atlantic, Qantas, Cathay Pacific ex Sydney.

Stay: .............. From tourist class to luxury (including the Mandarin Oriental, Shangri-La Hong Kong Island and Kowloon, The Peninsula).

Worth doing: ... Hong Kong Shopping Festival until August 31.

Packages: ...... Qantas Holidays (131415) four-night packs from $1520pp twin-share from Sydney (Oct 15-Nov 14). Cathay Pacific Holidays four-night packs for Hong Kong International Race Week (Dec 5-9) from $1769pp

Jingle tills all the way
Hong Kong Standard
Monday, December 24, 2007

The festive atmosphere is lifting consumer spending and promising double- digit growth in the retail market, thanks to a robust local economy and a predicted 10 to 15 percent increase in the number of tourists this month.

We believe turnover growth will be in the double digits for the Christmas season, fueled by the strong local economy and mainland tourists, said a spokesman at cosmetics retailer Sa Sa International (0178).

He said sales figures for the latest comparative period, the National Day Golden Week in October, showed Sa Sas sales growing more than 30 percent over the same period last year.

Local consumption also remained strong, undeterred by accelerating inflation that hit a nine-year high of 3.4 percent last month.

Irene So, general manager of retail marketing and promotions for Sino Estates Management the property management arm of Sino Land (0083) said yesterday the total number of customers visiting Olympian City, the largest shopping mall it manages, has been steadily increasing since early this month.

Total turnover is expected to exceed HK$200 million, an increase of 16 percent from the same month last year. We also expect to receive nine million customers, an increase of 11 percent, So said. People are better off and they have started shopping earlier.

Another landlord, Sun Hung Kai Properties (0016), said turnover at its major shopping malls such as New Town Plaza in Sha Tin and Grand Century Place in Mong Kok saw a 15 percent rise in turnover during the past weekend.

Hong Kong Disneyland said that, since the park launched its Christmas offers late last month, its stores have sold over 900,000 items.

Catering sector lawmaker Tommy Cheung Yu-yan said he is also expecting a 20 to 30 percent increase in the catering business in the wake of double-digit increases in the prices of special Christmas meals from last year.

The strong market means that the impact of inflation on business has been reduced, Yu said.

Census and Statistics Department figures indicated that retail sales turnover in October rose to HK$20.7 billion, up 16.6 percent from the same month last year.

Apart from the strong domestic demand, an increasing flow in the number of tourists has also helped retailers.

Joseph Tung Yao-chung, executive director of the Travel Industry Council of Hong Kong, estimates up to 2.7 million tourists arrived this month, a 10 to 15 percent year-on-year growth.

"As the Hong Kong dollar exchange rate with the yuan drops, tourists think that products are cheaper here," Tung said.

With over 90 percent of its total retail business coming from the local market, jeweler Luk Fook Holdings (0590) is also predicting a rosy outlook.

"We expect sales revenues to increase by 20 percent this year," director and financial controller Paul Law Tim- fuk said.

General manager Au Kwok-kau said the group saw a 40 percent growth in turnover over the October Golden Week.

"We are expecting sales to be better in the second half than in the first half," Au said.

Despite the optimistic forecast, KGI Asia head of research Ben Kwong Man-bun said retail counters may only inch up by 5 percent before Christmas, as prices had already increased over the past few weeks.

Luxury brands lure fashion-conscious Chinese

HONG KONG, Jan 16, 2008 (AFP) - Elements, Hong Kong's latest colossal shopping mall and luxury goods temple, is a living illustration of the city's bid to lure a new generation of brand-mad spenders from the Chinese mainland.

The new development has a massive 12,000-square-foot (1,115-square-metre) Gucci store, not to mention Prada, Ferragamo and Versace shops.

It has a direct rail link to Hong Kong's airport, and buses to and from Shenzhen airport just over the border to draw some of the more than 10 million mainland visitors who pour into the southern territory each year.

The visitors above all come to Hong Kong to take advantage of low import and sales taxes on luxury brands, although the market remains in general less sophisticated than Europe.

A Chanel spokesman said the territory did not yet show a huge demand for haute couture designs in the same way that Los Angeles or Paris would, but the demand for ready-to-wear was huge.

"The Hong Kong economy has developed one of the most affluent consumer societies in the world and this in turn has created opportunities for Chanel," a spokesman said.

The company however also uses Hong Kong as a launching pad into China, to tap the rapidly growing middle class in major cities and has plans for expansion over the next few years.

Betty Leong, head of retail development at MTR Corp, the rail conglomerate that spent 10 billion US dollars developing the area that includes the Elements mall, said Hong Kong was now taking full advantage of mainland appetites.

"A lot of individual visitors from the mainland travel to Hong Kong and this number will only go up. We are building on our mainland customers," Leong said. "There's definitely a big demand for luxury products here. Our statistics show the more established the brands, the better their businesses have performed."

Official figures show Hong Kongers spent 30 billion Hong Kong dollars (3.8 billion US, 2.5 billion euros) just on clothes and accessories in the first 11 months of 2007, one of the highest per capita spends in Asia.

In the same period, advertising spending on luxury fashion brands in the former British colony, including Christian Dior, Louis Vuitton, Gucci, and Dolce&Gabbana was 14 percent more than the whole of 2006 at 432 million Hong Kong dollars, according to a survey by market researcher Nielsen.

And the advertising seems to be helping draw mainland Chinese into the fold.

A recent HSBC study showed that three-quarters of affluent mainland Chinese have bought luxury goods, citing the products' quality, fashion and status symbol as the reasons for their purchases.

Moreover, China's growing economic might means it has itself become a powerful figure in the fashion industry.

Hong Kong Fashion Week launched this week, with the Chinese shopper high in the mind of the top Asian designers that gathered to show their fall and winter collections.

"Hong Kong is an important platform to reach the China market. We have made a lot of effort to invite buyers from the mainland," said Katherine Chan, a spokeswoman for the show.

Last year, the show attracted 5,037 buyers from the mainland in 2007, up from 4,260 in 2004.

"They have high purchasing power and are willing to spend money on fashion," she added.

But increasingly, luxury brands and designers are by-passing Hong Kong to head straight into the mainland.

Last year, Italian luxury group Fendi staged a speculator fashion show on the Great Wall to show off its new line partly designed by Karl Lagerfeld, while Giorgio Armani continues to expand into major Chinese cities.

Lane Crawford, one of Asia's oldest luxury department stores based in Hong Kong, also opened its first branch in Beijing last year. It has estimated there are about four million luxury goods customers in Beijing alone.

"Whether it's luxury product or not, companies are interested in the Chinese market," said Mary Chiang, who has more than two decades of experience in public relations and represented some of the biggest global luxury brands.

"China's population size is huge. It's has a fast-growing economy. It's only the tip of the iceberg. Whatever you sell you would want to go into China," she added.

Hong Kong shoppers positive over Christmas

HONG KONG, Jan 31, 2008 (AFP) - Hong Kong retail sales grew 16.8 percent year-on-year in December, as strong Christmas figures showed the city's shoppers remain positive, official figures showed Thursday.

The rise, to 25.1 billion Hong Kong dollars (3.2 billion US) shows a slowing compared to November figures of 19.5 percent growth, although total sales were higher in the busy festive run-up.

For 2007 as a whole, retail sales increased by 12.8 percent in value and were up 10.1 percent by volume over 2006 levels, the latest figures from the city's Census and Statistics Department showed.

A government spokesman said shopping sentiment remained robust in the city, despite tougher economic conditions globally.

"Total retail sales continued to grow strongly in December 2007 over a year earlier, reflecting the prevailing strength in consumer spending as well as the sustained rapid expansion of inbound tourism," the spokesman said in a statement.

"Looking ahead, the robust labour market conditions, vibrant inbound tourism and upbeat consumer sentiment should continue to render support to retail business.

"Yet the recent heightened volatility in the financial markets is an area to watch out."

Sales of motor vehicles and parts increased the most, by 37.9 percent, while there was also strong performances in electrical goods, photographic equipment and footwear and clothing accessories.

Esprit first-half net jumps 37pc
Hong Kong Standard
Thursday, January 31, 2008

Fashion retailer Esprit Holdings (0330) said its first-half net profit jumped a better-than-expected 37.3 percent from a year ago, thanks to higher sales growth and a strong euro.

Net income for the six months ended December 31 reached HK$3.3 billion, or HK$2.67 a share, from HK$2.4 billion, or HK$1.96 a share, over the same period in 2006.

The result beat the HK$3.1 billion average estimate by seven analysts polled by Reuters.

The luxury retailer said turnover jumped 27 percent to HK$18.5 billion from HK$14.6 billion a year earlier.

The company declared an interim dividend of 95 HK cents per share.

Esprit's net profit margin expanded by 1.4 percentage points to 17.8 percent over the period, as the retailer benefited from a tax reduction in Germany, deputy chairman John Poon Cho-ming said.

The retailer, which does business in more than 40 countries, generated nearly half its revenue from Germany during the period.

"We have one of the best business models," said Esprit chairman and group CEO Heinz Krogner.

"I don't see any reason why we should not grow by double-digits over the next 10 years."

Esprit, which derives more than 86 percent of its revenue from Europe, said it plans to take advantage of a possible global economic slowdown by expanding its market share.

The company will spend HK$500 million to open over 60 retail stores worldwide over the next six months, as part of its three-year expansion plan. The company opened 54 new stores during the reporting period - 29 of them in Europe, 47 in Asia and 11 in North America.

零售業商店生意滔滔
09/02/2008
http://the-sun.on.cc/channels/img/endmarker.gif

【專案組報道】鼠年伊始，本港零售業已呈現喜氣洋洋的繁榮景象，昨日年初二開市的商店，部分生意滔滔，職員更「做到無停手」。零售業界預料，下周會出現「利是一族」，將掀起另一輪購物熱潮。

在旺角區，一間大型時裝連鎖店職員表示，年初二的市道與年三十晚相若，忙個不停，連吃飯也沒時間，公司還特別加派三名職員協助。第一年在旺角東站附近商場開設時裝店的李小姐指出，初一、二顧客以個人遊旅客為主，生意較平日上升一成。

除時裝店受惠外，數碼產品商店亦生意滔滔，一間相機專賣店區域經理江先生表示，農曆年前受天氣影響，生意額較去年同期下跌四成，幸好年初一、二生意大升兩、三成，他更強調：「可能經濟好，好多客人揀貴價機，冇考慮價錢就買。」

Retailers to gain from cancellation of Golden Week UnionPay sees rise in card spending
20 February 2008
South China Morning Post

The cancellation of the mainland's Golden Week holiday in May could be a boon for the city's retailers, with predictions it will encourage more frequent but shorter visits to Hong Kong by cashed-up tourists.

China UnionPay, the country's sole domestic interbank card operator, said the move to replace the week-long holiday with shorter breaks might boost bank card spending to record highs this year.

Travellers from the mainland spent HK$21.27 billion in Hong Kong using UnionPay cards last year, representing a 71 per cent increase from 2006. In Macau, mainland travellers splurged HK$20.43 billion, with transactions via point of sale machines accounting for about 70 per cent.

"With the rapid development of the mainland economy and the appreciation of the yuan, this year will continue to see robust spending growth in Hong Kong," said Larry Wang Lixin, deputy general manager of China UnionPay Hong Kong.

His comments ease fears mainlanders may cut spending in the city after the May Golden Week was abolished by the State Council effective this year to ease congestion on the nation's transport networks.

It will be replaced with three-day breaks wedged between the week-long Lunar New Year and National Day holidays. "The Golden Week holiday was split into shorter holidays so this in turn should benefit nearby tourist spots such as Hong Kong and Macau," Mr Wang said.

UnionPay said card spending in Hong Kong could maintain double-digit growth this year, but would start to enter a slowdown period after increases of more than 70 per cent in the past three years. Mainland residents used to carry large sums of cash to go shopping as late as the 1990s due to a lack of bank card services.

As the UnionPay network expanded from the mainland to Hong Kong and Macau, cards allowing point of sale dealings and automated teller machine transactions have become a common spending tool for luxury items.

"Our bank card holders normally spend 30 per cent on watches, jewellery and leather bags," Mr Wang said.

Under current regulations, mainland residents are allowed to bring as much as HK$20,000 into Hong Kong on each visit. "The amount of cash is not sufficient to meet their spending needs," he said.

However, a weaker mainland economy might mean average spending by travellers would continue to decrease, said Professor Raymond So Wai-man, associate dean of business administration at the Chinese University of Hong Kong.

"Their spending has come down to HK$4,000 from HK$5,000 when the individual travellers' scheme was introduced."

The scheme was announced in July 2003 allowing individual travellers to visit the city rather than join tour groups.

Hong Kong retail sales get New Year boost

HONG KONG, March 3, 2008 (AFP) - Hong Kong retail sales rose 23.3 percent year-on-year in January, with strong figures ahead of the Lunar New Year showing the city's shoppers remain positive, official figures showed Monday.

The increase, to 25.7 billion Hong Kong dollars (3.3 billion US), was due in part to the timing of the Lunar New Year holiday, which fell in early February this year.

Retail sales tend to show greater volatility in the first two months of the year as consumer spending during the period is affected by the timing of the holidays.

By volume, sales grew by 17.4 percent, making January the eighth consecutive month of double-digit year-on-year volume growth.

A government spokesman said the growth was broad-based, spreading across all major types of retailer.

"Looking ahead, the strength in consumer demand, on the back of strong economic fundamentals and rising labour income, together with the robust inbound tourism, should be favourable to the further expansion of retail business," the spokesman said in a statement.

Sales of footwear and clothing accessories rose the most, by 35.6 percent, while there was also strong growth in electrical goods, photographic equipment and motor vehicles and parts.

Designer brands battle for slice of booming Asia market

HONG KONG, March 13, 2008 (AFP) - Luxury brand Chanel's choice of a Hong Kong carpark roof to launch a global-trotting art exhibition raised some eyebrows, but the location reflected Asia's growing importance to the fashion world.

Chanel's flamboyant pony-tailed designer Karl Lagerfeld described the venue, besides the city's famous Victoria Harbour, as stunning.

"Hong Kong is most beautiful at night," he said at Wednesday's launch of the Mobile Art Museum, a moveable structure by architect Zaha Hadid that exhibits work by 20 artists based on Chanel's quilted handbags.

Vincent Shaw, Chanel's president for Asia Pacific, said Hong Kong was carefully chosen as the best place to launch the exhibition before it tours other fashion capitals around the world, including London and New York.

"Asia has a huge population and an incredible liquidity. We believe that there's huge opportunity and Asia is going to be very successful," Shaw said.

Asian consumers account for more than 50 percent of the annual 80 billion dollar sector, more than the US and Europe combined, according to Radha Chadha co-author of the book "The Cult of the Luxury Brand."

"The reason why Asians buy so many luxury brands is that in Asia you are what you wear. A luxury brand is a symbol that defines who you are and your social status," Chadha told AFP.

"People judge each other by what brand of handbag they are carrying."

With Asia being the world's biggest market for Western luxury goods, international brands are shifting focus from Paris, New York and London to the fast-growing emerging markets in the region.

Major designer brands, including Christian Dior and Gucci, spent more than 60 million dollars on advertising in Hong Kong last year, 23 percent more than in 2006, according to a study by market researcher Nielsen.

This Friday, Hong Kong will see Louis Vuitton step up the battle for a bigger slice of the Asian market with the re-opening of its massive store after a year of renovation -- more than double the size of its old shop.

The store, across the harbour from Chanel's mobile art gallery, is Louis Vuitton's second-largest after its flagship building on the Champs Elysees in Paris.

Jean-Baptiste Debains, Louis Vuitton's president for Asia Pacific, said the company has recorded double-digit annual growth in Hong Kong.

"The Hong Kong market is quite mature but is still growing. We have strong potential with the local customers because of the growth of wealth and the economy as a whole," he said.

Chadha predicts that Hong Kong's neighbour -- mainland China, one of Louis Vuitton's fastest-growing markets -- will overtake Japan as Asia's biggest luxury market in seven years, with India set to storm ahead too.

In mainland China, Louis Vuitton has already 18 stores located in Beijing, Shanghai and in other smaller cities, with six more expected to open this year.

"There are a lot of cities in China where we can have stores, maybe not today, maybe in three years," Debains said.

But it is not all about China. Vietnam has also become a focus for the company, with chief executive Yves Carcelle quoted in the Financial Times as saying revenues there grew more than 300 percent last year.

Louis Vuitton will also open stores this year in Indonesia, South Korea and Taiwan.

Coach, the US maker of handbags and accessories, said it aims to grow its Chinese operation by more than 60 percent over the next few years and will open a global flagship store in Hong Kong this summer.

The combination of mainland China, Hong Kong, Macau and Taiwan have the potential to become the third major market for Coach, following North America and Japan, it said.

Chadha warned the economic slowdown in the United States, with fears the world's largest economy is slipping into recession, was likely to hit luxury goods consumption.

But Louis Vuitton's Debains said growth in Asia looked unstoppable.

"I feel there's a stronger dynamism and energy in Asia. Maybe that is because we have the economic growth that creates the kind of spirit that pushes people to go forward," he said.

Consumer prices rise 4.2%



Price check: Consumer prices in March rose 4.2% over the same month last year, but were down on February's 6.3% rise.

Consumer prices in March rose 4.2% over the same month last year, but were down on February's 6.3% rise, the Census & Statistics Department says. The inflation fall is due to the low base of comparison arising from the waiver of public housing rentals in February.



The one-off policy measure of a rate concession for January to March continued to impact consumer prices in March. Netting out the effect of this factor the underlying inflation rate was 5.3%, larger than February's 5.1% figure.



The larger underlying inflation rate was due mainly to the enlarged rise in private housing rentals, prices of women's clothing and the cost of meals bought away from home.



Food price development
The pick-up in inflationary pressure in recent months was largely due to the upsurge in food prices, which was driven by global food inflation, the department said. The sustained brisk expansion of local economic activities also added pressure on prices and costs.



The inflation rate in the coming months will continue to be affected by food price developments. If the current tight supply situation in the international food market gradually eases later this year or early next year, it will help mitigate inflationary pressure.



Meanwhile, developments in the exchange rates of the US dollar and renminbi as well as local wages and rentals also need to be watched closely. Nevertheless, the various relief measures announced in the 2008-09 Budget and sustained labour productivity growth should help cushion inflation.



Food, electricity, clothing costs

March saw year-on-year increases in the price of food (excluding meals bought away from home) at 17.2%. Foods with large price hikes were pork (59.1%), beef (50.8%), canned meat (44.2%), other meat (29.5%), fresh seafood (20.3%), eggs (19.4%) and frozen meat (19.4%).



Year-on-year increases were also recorded in electricity, gas and water prices (7.1%), meals bought away from home (5.9%), miscellaneous goods (5.5%), clothing and footwear (3%), transport (2%), housing (1.9%) and alcohol and tobacco (0.4%). Year-on-year falls were recorded for durable goods (3.5%).

Mainlanders take top spot on spending list
Hong Kong Standard
Wednesday, April 30, 2008

Mainlanders are the city's biggest shoppers, spending 70 percent and 30 percent more than Hong Kongers and other tourists, respectively, according to a Polytechnic University study.

Mainland shoppers spend an average of HK$2,862 per transaction at the retail level, compared with HK$1,682 for locals and HK$2,145 for other tourists, according to the university's Asian Centre for Brand Management.

When it comes to precious items such as gold, jewelry and watches, mainlanders shell out HK$7,034 per transaction.

But the center found non-mainland shoppers are more interested in electronics and spend HK$5,000 per item.

The center also found frontline staff such as sales and customer services have improved their Putonghua over the past couple of years, though their proficiency remains below their level of English.

The growth in the number of sales staff has not caught up with the expanding retail sector.

The total number of retail sales staff increased only 6.75 percent in 30 months from 224,618 in June 2005 to 239,780 in December 2007, against the rate of increase in retail expenditure (23.6 percent) and tourist arrivals (37.9 percent).

The report pointed out that most retailers are rather conservative and unwilling to employ more frontline staff but, from the customers' point of view, time and effort are included in the costs. It will affect Hong Kong's image as a shopping paradise and also their plan for future visits, the report warned.

But the study had some encouragement for the retail and tourism sectors - the results showed the territory has regained its image as a safe, reliable and low risk shopping city despite experiencing negative publicity from a scandal over counterfeit products early last year.

The findings released yesterday are some of the key points highlighted in the Customer Perceived Value of Hong Kong's Retail Services report.

The study is based on 2,640 completed questionnaires from shoppers on their shopping experiences involving nearly 400 shops in January.

The project, which began in 2004, assessed the satisfaction of both local customers and tourists about the retail services.

The report says Hong Kong's seven major retail categories showed slight improvements in service quality, staff attitude and interaction with customers compared with the past. The seven categories are fashion, jewelry and watches, electronic products, department stores, cosmetics, footwear and telecommunications.

But product quality and design, shopping environment and price have not improved at all for the past few years.

China's nouveau riche have insatiable appetite

SUSAN FENTON

Reuters

May 29, 2008 at 8:17 AM EDT

HONG KONG — European and American fashion designers feeling the pinch from the credit crisis can look to the growing ranks of China's nouveau riche to boost sales.

China's millionaires' club is expanding rapidly and many new members are women who don't even blink when asked to pay a cool $10,000 for a cocktail dress from a top international designer.

"The Chinese are the newcomers to the global market," said Sebastian Suhl, Asia-Pacific chief executive of Italian fashion house Prada, which has nine stores in China.

"They're very hungry to learn about fashion. Fashion represents obviously status, but luxury is also a kind of bridge to the modern world for them."

As the Chinese economy surged more than 10 per cent annually over the past five years, the country boasted 345,000 U.S. dollar millionaires by the end of 2006, a third of whom were women, according to a report by Merrill Lynch and consultancy Capgemini.

Some 5,000 mainland Chinese had assets exceeding $30 million, accounting for a third of Asia-Pacific's super-rich.

Even affluent Chinese women, without millions in the bank, are willing to spend their savings on designer fashions, seen as the ultimate status symbol in a communist country that is increasingly becoming preoccupied with the trappings of wealth.

Elegantly dressed Chinese manager Zhang Ning, 30, has never been to France but she likes to wear Hermes which she says is the epitome of style.

"I like its simplicity, it makes me feel elegant," said mS. Zhang, who works as a manager at an electric power company in the southern Chinese city of Guangzhou.

"France for me is elegance: good fashion and wines."

While luxury goods makers such as Louis Vuitton have benefited from booming demand from Chinese keen to show off their newfound wealth by wearing clothes and accessories emblazoned with prestigious logos, Western couture houses such Hermes are now tapping into the more discreet tastes of the super-rich.

"The mainland Chinese market is still very accessories oriented but we believe that will change," said Alex Bolen, chief executive of New York-based couture house Oscar de la Renta, whose sleek cocktail dresses retail for up to $10,000, while its evening gowns approach double that.

"There's definitely a market for the cocktail dress. But what has surprised us, pleasantly, is how rapidly the customer has also adopted our daywear."

Leading the charge is up-market Hong Kong department store Lane Crawford which is bringing designers to China who are seen as being on the cutting edge in the West but are not well-known in China.

The opening of Lane Crawford's first store in Beijing last October has expanded the China presence of British designers such as Alexander McQueen and Stella McCartney and heralded the arrival of more niche designers including Dries Van Noten, Hussein Chalayan and Rick Owens.

Buyers from Lane Crawford now take prized front-row seats at fashion shows in Paris and Milan, alongside buyers from high-end U.S. retailers Saks and Nieman Marcus.

Meanwhile, Chinese fashion editors, headed by Vogue China, have become an influential presence on the European fashion scene.

China's ongoing transition to a more market-oriented economy after decades of strict communist rule is producing a constant stream of newly rich.

Their purchasing power and the growing sophistication of a more established wealthy clientele is creating a very diverse market for fashion, says Angelica Cheung, editor of Vogue China. The magazine was launched in 2005 and it has 320,000 readers.

"It's very different from the West, there are a lot of entrepreneurial opportunities and there are wealthy people emerging all the time," said Ms. Cheung.

"A young woman who might now be on a monthly salary of 5,000 yuan (US$716) could next year be running her own business. So it's a very aspirational market. Her first luxury product might be a Louis Vuitton bag but within a few years she might move on to something more niche such as Marni."

Chanel is the most preferred high-end fashion brand for affluent Chinese followed by Giorgio Armani, according to a report by MasterCard.

Oscar de la Renta says China is central to a strategy for Asia which it hopes will account for 20 per cent of its sales within five years, up from 5 per cent at present, helped by its burgeoning accessories' business.

Luxury brands can easily sell their perfume and cosmetics in local department stores. But when it comes to ready-to-wear fashion, they are all competing for space and customers in a handful of luxury malls such as Plaza 66 in Shanghai and Lane Crawford in Beijing where rents are sky high.

"They're overpaying (on rent) but they're looking at China as an investment," said Marcel Braun, Hong Kong-based executive vice-president of Swiss company DKSH, which advises luxury firms on market expansion.

"Fifteen years ago brands came and left. Now they can't do that any more, China's too important."

Rampant copying of accessories brands remains a problem for luxury goods firms in China, but it is much less evident among high-end apparel.

Yet nevertheless high-quality copies of designer handbags can be purchased across Beijing and Shanghai for just a pittance of the retail price of the originals.

China's luxury market is still in its infancy and luxury retailers are experimenting to find the right model and get the sales strategy right, analysts say.

Lane Crawford has pieces of modern art on display in its spacious Beijing store, aiming to offer a new concept in shopping. It sells more than 600 high-end fashion brands, but visitors to the store say shoppers are often scarce.

Lane Crawford says its Beijing store is the first stage in a long-term plan for China and other stores will be rolled out in the future.

Retail analysts say that having a flagship store rather than being among dozens of brands carried in a high-class department store is the best way to achieve brand recognition and exclusivity in China.

However, it is difficult and expensive to find good sites for boutiques in China due to exorbitant rentals in high-end areas.

Reaching out beyond Beijing and Shanghai is the next step. The southern boom city of Shenzhen replaced Chengdu in 2007 as the city with the highest average spending on luxury goods, according to Credit Suisse, while the size of the luxury markets in Shenzhen and Wuhan doubled.

Mr. Braun says fast-growing northeastern cities such as Dalian offer better opportunities for expansion than southern cities.

Zhang Ning from Guangzhou heads to Hong Kong to shop at Hermes because there is no sales tax and luxury items are 30 per cent cheaper than on the mainland.

A long-established market for luxury goods, Hong Kong also offers a much wider choice of designers.

Neighbouring Macau, a former Portuguese enclave, is also becoming a shopping hub for affluent mainland Chinese following the arrival of U.S. casino operators in the past few years.

Prada's edgier offshoot Miu Miu earlier this year staged its first fashion show in Asia in Macau, flying in the Crazy Horse cabaret revue from Paris to perform in front of local glitterati at the ritzy Wynn Macau casino resort, which houses Prada and Chanel boutiques in its ground-floor lobby.

"I believe Macau will be comparable to Hong Kong in terms of sales in the next few years," said Prada's Suhl.

Miu Miu, which sells at Lane Crawford in Beijing, plans to open its first independent mainland China store in Shenzhen this year. Meanwhile, Hermes is preparing for the opening of a 500-square-metre store in Beijing before the Olympic Games in August.

China sales will help offset a long-term decline in business in Japan, aggravated by its rapidly aging population, it says.

source: http://www.theglobeandmail.com/servlet/story/RTGAM.20080529.wriche0529/BNStory/International/home

As long as they don't rush the grocery stores to push up prices for everyday necessities :)

From news.gov.hk:
April retail sales value up 18.7% (http://news.gov.hk/en/category/businessandfinance/080602/html/080602en03004.htm)

http://img128.imageshack.us/img128/7522/25733882129ac60f27eeosn1.jpg

source: http://www.flickr.com/photos/allenyeh/sets/72157605572634606/

http://img128.imageshack.us/img128/7522/25733882129ac60f27eeosn1.jpg

source: http://www.flickr.com/photos/allenyeh/sets/72157605572634606/

:clown:

Where is the COACH??

D'Aguilar Street / Queen's Road Central

Mega malls meet shoppers' demands
25 June 2008
South China Morning Post

Developers have seized the initiative in bringing innovation to their modern retail malls, as shopping and entertainment become integral parts in the development of East Kowloon.

The rise of new complexes such as APM in Kwun Tong and MegaBox in Kowloon Bay provided a catalyst to the district's transformation with more local people given the opportunity to enjoy an increasingly sophisticated retail experience.

East Kowloon had long been regarded as a decaying district, with a major concentration of public housing estates and limited choices for shoppers. But the situation has changed in recent years with the completion of several office and commercial developments. Modern malls have sprung up to capitalise on the untapped potential of the district.

Maureen Fung Sau-yim, general manager of leasing for Sun Hung Kai Real Estate Agency, a subsidiary of Sun Hung Kai Properties, said the group developed APM because it felt the district's shopping market had tremendous potential for growth.

She said APM, which opened in 2005, had created a new concept in retailing and had emerged as a shopping mall particularly for customers aged between 19 and 39.

"It is a break from the traditional shopping mould and the first mall in our portfolio to carry no Chinese name. As the name suggests, APM is a blend of am and pm, or day and night, reflecting innovative late-night shopping," she said.

Retail shops stay open until midnight at the mall, restaurants until 2am and entertainment spots until dawn.

Ms Fung said the mall incorporated an "omni-lifestyle magazine concept", emphasising a different shopping experience each day for its youthful clientele. "We stress change and different offers for shoppers. We like to create a unique shopping experience with something different in the merchandise mix and the mall presentation.

"Retailers understand our retailing strategy and keep their menu and products unique to provide customers with a total shopping experience," she said. "We have various celebrity shows and promotional activities to stage for customers."

Ms Fung said the group had worked hard to build the mall's brand, making it a popular gathering place with trendy entertainment and lifestyle stores.

Its success means good rent returns, with this year's expected to reach about HK$300 million, up from HK$240 million in its first year of operation.

She pointed to East Kowloon's rapid transformation in recent years, with the completion of many office towers and companies relocating from other districts such as Causeway Bay, Tsim Sha Tsui and Quarry Bay.

This trend would drum up further retail demand in East Kowloon and the district could grow and rise as another "Causeway Bay" for shoppers, she said.

The massive MegaBox in Kowloon Bay has become another retail hot spot in East Kowloon for shoppers in the neighbourhood and outside the district since its opening last year.

Czarina Man Ching-chi, general manager for marketing at MegaBox Development, a subsidiary of Kerry Properties, said MegaBox, with 1.1 million sqft, was the largest shopping mall in East Kowloon aimed at families and people from all walks of life.

Spread over 19 floors at Enterprise Square 5, the mall adopted a revolutionary "big-box" strategy to include occupants that took up larger space - about 60 per cent of the retail space was taken up by tenants occupying more than 10,000 sqft each, she said.

MegaBox features four major categories of tenants. The fashion zone is between the ground and second floors with more than 200 international brands.

At the home improvement zone, B&Q from Britain and Spotlight from Australia are the two major anchor tenants.

The family zone on the fifth to ninth floors includes a concentration of electronics shops, the MegaKids corner showcasing childrenswear brands, and other retailers such as a supermarket and book store. The entertainment zone, spread from the 10th to 18th floors, features Hong Kong's first commercial Imax theatre, seven UA cinemas, more than 30 dining outlets and Hong Kong's largest ice-skating rink.

Ms Man said MegaBox was 94 per cent leased and the remaining space, mainly smaller shops, was available at an average rent of about HK$70 to HK$80 per sqft a month.

Since its soft opening in June last year she said the mall had injected fresh life into the shopping and entertainment experience in East Kowloon, and that shopper traffic was increasing.

"We provide one-stop shopping with a variety of offers at MegaBox. More people are coming to shop in Kowloon Bay. We have also witnessed an increase in customer length of stay at our mall," she said.

"The prospect for growth in East Kowloon is promising with the massive housing and commercial developments in the neighbourhood, especially when the nearby Kai Tak [airport] redevelopment will create more business opportunities. Demand for shopping and entertainment will grow further as a result."

Kerry Properties is controlled by the Kuok Group, the controlling shareholder of the SCMP Group, which publishes the South China Morning Post.

'Compulsive shopaholics' prone to depression
(08-11 15:37)
Hong Kong Standard

Nearly 7 percent of the 1,489 people - mostly in their 20s - surveyed by the Tung Wah Group of Hospitals and the University of Hong Kong were found to be compulsive shopaholics.

About half of the "compulsive shopaholics'' earn no more than HK$10,000 a month, according to the poll conducted between July 2007 and January of this year.

A hundred people were identified as "compulsive shopaholics''. About 77.5 percent of them were men and 65 percent were women. The poll - conducted jointly by the two organizations - also found the shopaholics were prone to suffer from depression and general anxiety.

Megabox needs to be better connected to the train station. At the moment it's quite annoying to get from the station below Telford Plaza to Megabox.

^ Yea, I don't think we can get a solution for another 10 years until Kai Tak is redeveloped. In the meantime, the shuttle from Kowloon Bay (not sure if the one to Kwun Tong still runs) will have to do.

Hong Kong retail sales slow to 6.9 percent
3 November 2008
Agence France Presse

Hong Kong retail sales growth slowed to 6.9 percent year-on-year in September as weak consumer spending linked to the world economic crisis began to bite, the government said Monday.

Retail sales were worth 20.9 billion Hong Kong dollars (2.68 billion US) in September, the Census and Statistics Department said. Year-on-year growth represented a drop from 10.4 percent in August.

Sales rose by 14.1 percent over the first nine months of 2008 compared with the same period a year earlier. Sales volume increased by 7.6 percent over the same period.

The volume of sales of electrical goods and photographic equipment increased the most year-on-year, by 13.3 percent. That was followed by sales of motor vehicles and parts, which was up 13.1 percent.

Footwear other clothing accessories saw the biggest fall, of 8.3 percent.

"The growth of retail sales moderated further in September, as consumer spending had weakened against the backdrop of the escalation of the global financial crisis and the ensuing deterioration in economic prospect," a government spokesman said in a statement.

He warned asset price corrections, slowing economy and deterioration of labour market conditions were expected increasingly to affect consumer sentiment.

Hong Kong retail sales slow to 0.3 percent
1 December 2008
Agence France Presse

Hong Kong retail sales growth slowed to 0.3 percent year-on-year in October as weak consumer spending linked to the world economic crisis continued to bite, the government said Monday.

Retail sales were worth 20.8 billion Hong Kong dollars (2.67 billion US) in October, the Census and Statistics Department said. Year-on-year growth represented a drop from 6.9 percent in September.

Sales rose by 12.7 percent over the first ten months of 2008 compared with the same period a year earlier. Sales volume increased by 6.4 percent over the same period.

The volume of sales of electrical goods and photographic equipment increased the most year-on-year, by six percent. That was followed by sales of fuels, which was up 5.5 percent.

Motor vehicles and parts saw the biggest fall, of 23.9 percent.

A government spokesman said retail sales weakened considerably in October, as the adverse impacts of the economic crisis on consumer spending had increasingly set in. The sluggish performance of inbound tourism in that month also posed a drag.

"The negative wealth effect arising from the asset market corrections, as well as the worsening income and job prospects, will continue to weigh heavily on consumer spending," he said.

"The business conditions for the retail trade are likely to remain difficult in the coming months."

Price cuts spark bonanza
29 January 2009
Hong Kong Standard

Shopping malls have reported a sharp rise in sales as Hong Kong consumers took advantage of price cuts and special promotions and went on a splurge over the Lunar New Year holidays.

Shoppers have become more cautious in the wake of the financial tsunami and shopping centers are planning more promotions to encourage spending, said Sun Hung Kai Real Estate Agency deputy general manager (leasing) Fiona Chung Sau-lin.

The company launched marketing campaigns including selling dried seafood packets for HK$1 and flowers for the same amount. Sales in the eight shopping malls owned by Sun Hung Kai Properties (0016) saw sales jumping 20 percent from last year to HK$208 million, while visitor numbers rose 11 percent to 5.33 million from January 21 to 28.

Sino Group said its Tuen Mun Town Plaza recorded HK$350 million in revenue in the first half of January and expects total turnover of more than HK$700 for the full month, up 8 percent from the same period last year.

Shopping mall tenants selling electronic items recorded a 30 percent rise in revenue, those selling clothes and jewelry saw a 15 percent gain while restaurants had double-digit growth.

Mall general manager Ronnie Chan Yam-ling said many people started to shop for the Lunar New Year in early January. There were 500,000 shoppers _ the highest ever_ on January 25, when the central Tuen Mun mall stayed open for 24 hours. Up to yesterday, 8.2 million people visited the shopping complex.

Sino Group's four malls, Tuen Mun Town Plaza, Avon Mall and Regentville Shopping Mall in Fan Ling and Tseung Kwan O's Maritime Bay Shopping Mall, had 10 million visitors up to yesterday.

Plaza Hollywood, a shopping mall in Diamond Hill, predicts revenue of HK$240 million for January, up 10 percent. The Link REIT (0823) said its tenants reported that turnover during the holidays was 20 percent higher compared to normal days.

Restaurants, especially those serving local cuisine, were the best performers thanks to an influx of mainland tourists.

Malls look forward to cracking Easter sales
Hong Kong Standard
Wednesday, March 18, 2009

The economic meltdown has not reached Langham Place in Mong Kok yet, according to its general manager.

Speaking enthusiastically about the mall's Easter plans, Vivian Leung Wai-mun said yesterday business in January and February was up 20 percent on the same period last year.

With holidays on the way, plus the extension of the individual travel scheme for mainlanders, the hotel-shopping complex is expecting a 20 percent rise in April.

"Because of the economic meltdown, local shoppers will stay and spend in Hong Kong instead of traveling," Leung said.

"Also with more mainlanders being allowed in from April, we expect business to improve. Although people are more cautious with their spending, they will still spend on necessary goods and on bargains."

To capitalize on the influx of more mainlanders, and to cater to locals who are not going away, Langham Place will stage what it calls its "Happy Sales" at all 200 stores from April 10-13.

There will also be cash redemption coupons for special purchases, discounts and gifts worth around HK$10 million.

Mainlanders with valid documents may get the LP card - a membership card issued to shoppers who spend HK$500 or more - free.

This will enable them to enjoy cash redemptions, cash coupons or gifts.

Leung said she expects the percentage of business growth to be in double digits this year.

Sun Hung Kai Real Estate Agency will give discounts on 300 items at 200 stores in its eight plazas.

A spokeswoman for Times Square said some chain stores estimate the ratio of mainlanders will increase from 50 percent of their current customers to more than 80 percent in April.

She said the plaza will offer discounts and redemption gifts to individual travelers, as well as to local spenders.

Brand names take different growth view
Large-scale shopping centres and shaky sentiment leave retailers pondering the future
22 April 2009
South China Morning Post

The outlook is mixed for the Hong Kong retail sector with several international brands postponing their expansion plans while others are continuing with their growth strategies despite the poor market sentiment.

Developers have also adopted entirely different growth strategies for shopping centres.

Sources said well-known watch brands A. Lange & Sohne, Glashutte and Franck Muller had signed agreements with Cheung Kong (Holdings) for space at 1881 Heritage, the former Marine Police Headquarters in Tsim Sha Tsui, at the end of 2007. However, the trio have withdrawn their Heritage plans in recent months.

A spokesman for Richemont Asia Pacific, the luxury goods group that owns the A. Lange & Sohne brand, yesterday said that market sentiment was behind the decision to pull out from the 1881 Heritage site a few months ago. "Opening a new shop is a big investment. We have to consider market sentiment when making a decision."

Leo Poon, the brand manager for Glashutte Original for North Asia, said: "There is no final decision and we cannot say too much at the moment. We will make an announcement later."

Sincere Watch (Hong Kong), the distributor of Franck Muller in Greater China, declined to comment.

A spokesman for Cheung Kong did not comment on the withdrawals saying only that the company signed no retail lease agreements in 2007.

However, Cartier and Tiffany & Co had executed the lease agreements and fitting out was under way.

Jeanette Chan, the regional director of retail at consultants Sandalwood, said: "The market is very mixed. We have seen many international watch brands expanding at 1881 Heritage and iSquare in the same time."

Mainland travellers are the main source of customers for the luxury watch industry.

A property agent said mainland travellers were more familiar with the bigger international brands, such as Cartier, and shopped accordingly. However, the lesser-known brands faced higher investment risk because of the poor market sentiment.

Meanwhile, developers are divided about the outlook for the retail market.

Hong Kong Sheraton Hotel in Tsim Sha Tsui owned by Hutchison Whampoa and Tai Cheung Holdings has delayed renovations planned for this year.

According to sources, the hotel last year planned to renovate the shopping centre and improve the connection with the MTR station in June this year. However, the plan is now on hold.

A spokeswoman for the hotel confirmed that the combination of still- running leases and the market sentiment was the cause of the delay.

"We had several renovation plans last year. But we won't renovate the shopping centre this year," she said.

The spotlight is about to shine on the retail market in Tsim Sha Tsui as four large-scale shopping centres - iSquare, K11, 1881 Heritage and the Tung Ying Building redevelopment projects - are scheduled for completion over the next two years.

Eric Yuen, an analyst at Dao Heng Securities, said Nathan Road's image and position in the market was very different from Canton Road.

"But that will change when iSquare and the Tung Ying redevelopment are completed," Mr Yuen said. "This is the perfect time for Sheraton Hotel to take the six to 12 months needed to renovate its retail complex. If it launches with a new face at the same time as the other developments, it will attract more shoppers."

Other developers such as Sun Hung Kai Properties, the Link Management and Swire Properties are doing just that to catch the revival they see coming in the next few years.

Maureen Fung Sau-yim, the general manager for leasing at Sun Hung Kai Real Estate, said the company would spend HK$40 million to renovate the apm shopping centre in Kwun Tong in the second half of this year. The project will be completed next year.

"We decided to renovate apm after the global financial crisis. It's our show suite in Hong Kong as we are developing the brand and the concept for the mainland," Ms Fung said.

She said the company was optimistic about the outlook for the market as new retailers recorded 15 to 20 per cent growth in turnover after the financial crisis.

Scott Nugent, a project and development director with the Link Management, said there was a lot of potential in the company's portfolio and despite the global financial crisis, HK$1.13 billion had been earmarked for the renovation of 19 shopping centres by 2011.

Mr Yuen was upbeat, saying retail market rents and prices would outperform other property sectors.

"Although visitor arrivals dropped in recent months, I believe tourism spending will continue to go up this year," he said.

HK consumers found to be pickiest in Asia
30 April 2009
South China Morning Post

Hongkongers are the pickiest consumers in Asia, a magazine's regional survey has revealed.

Reader's Digest Trusted Brands Survey polled 8,000 people in Hong Kong, India, Malaysia, Singapore, Taiwan, Thailand, the Philippines and the mainland last October. Hong Kong respondents were the least satisfied with customer services out of the eight areas.

Results show 59 per cent of Hongkongers were satisfied with in-store customer services, 39 percentage points behind the Philippines - the area with the highest satisfaction level. It was also lower than the Asian average of 74 per cent.

The same goes for customer service for handling product problems and repairs. A mere 53 per cent were satisfied with it, compared with 97 per cent in the Philippines. The Asian average was 67 per cent.

"It's more likely that expectations of Hong Kong consumers are much higher than in other areas," said group advertising director in Asia Simon Cholmeley. It did not mean the quality of local brands was worse, he said. Nevertheless, the results "show an opportunity to increase standards" in the face of demanding Hong Kong customers.

Two Hong Kong firms, Cathay Pacific and Kee Kum Kee, were among 63 brands - local and international - voted consumers' favourite brands across the eight areas.

Another 35 local brands, selected solely by Hong Kong respondents, were presented with regional awards. They included PCCW, the University of Hong Kong, Ocean Park, Sun Hung Kai Properties and Doctor's Choice, all Platinum Brand Winners.

HK March retail sales slump 7.7 pct yr/yr

HONG KONG, May 4 (Reuters) - Hong Kong retail sales in March dropped 7.7 percent by value from a year earlier, worse than expected and the second straight monthly drop, as the highest unemployment in three years weighed on confidence.

Taking January, February and March data together, sales value fell 3.9 percent from a year earlier, while volume was down 5.5 percent, the government said on Monday.

In volume terms, March sales fell 9.3 percent from a year earlier.

KEY POINTS:

-- In the three months through to March, the volume of sales decreased by 3.7 percent, seasonally adjusted, from the preceding three months.

-- A Reuters survey had forecast a 7.5 percent drop in March retail sales by value and an 8.8 percent decrease in sales volume.

COMMENTARY:

KEVIN LAI, ECONOMIST, DAIWA INSTITUTE OF RESEARCH

"It's a slight disappointment, although it's better than February. Overall, local consumer sentiment remains very weak. That's the key reason behind that. We have yet to see a substantial increase in Chinese tourist numbers as a result of the travel liberalisation measures.

We will continue to recover at a fairly moderate pace. Again, job conditions remain a little fragile. Going forward, job creation will be quite weak, mainly because the government is holding up its fiscal stimulus measures.

On the other hand, the global environment is stabilising and we'll probably see the effects from the travel liberalisation measures, with more Chinese tourists coming. That will be positive, but I don't expect a very strong recovery."

PAUL TANG, CHIEF ECONOMIST, BANK OF EAST ASIA

"That's a much bigger drop than I expected, which was -3 percent in value and -5 percent in volume. The drop was because of the high unemployment rate -- that really discouraged consumer spending.

We are sitting on a full-scale recession at a time when external trade shows no signs of rebounding yet and tourist arrivals are not going to support growth. We're going to see tougher times ahead."

GOVERNMENT STATEMENT:

"Although the improved performance of the stock and property markets since the beginning of the year rendered some support to consumer sentiment, uncertain job and income prospects continue to weigh on consumption spending, particularly spending of big-ticket items like motor cars, furniture and jewellery.

The near-term prospects for the retail business will continue to be overshadowed by the economic downturn."

MARKET REACTION:

-- Retail sales data was released after the stock market closed.

LINK:

-- To view the full details of retail sales data, see the Hong Kong government website at: http://www.info.gov.hk/hkecon/key/index.htm

BACKGROUND:

-- March sales totalled a provisional HK$20.8 billion (US$2.68 billion).

-- Hong Kong tipped into recession in the third quarter of last year, with consumers reluctant to spend due to rising unemployment, now at a three-year high of 5.2 percent, and expectations for little, if any, wage growth this year.

A Reuters poll forecast the economy would contract 3 percent this year, the first full-year contraction since the Asian financial crisis in 1998.

-- Visitor arrivals in February fell 8.1 percent from a year earlier, hit by the Lunar New Year holiday as more than half of the territory's tourists come from mainland China. Tourists account for 20-30 percent of Hong Kong retail sales. (US$=HK$7.75)

Frantic shoppers swarm crazy sale
Hong Kong Standard
Friday, May 22, 2009

Thousands of frantic shoppers yesterday scrambled for bargains at Yata department store in Sha Tin where goods were being sold for discounts of up to 90 percent.

Shoppers swarmed into the store when the gates opened at 9am, grabbing anything that appeared to be reasonably priced.

Bedroom furniture was being sold at 10 percent of the original price, while some brands of milk powder were advertised at 40 percent off.

Suitcases were going at half price and brand- name swimsuits at HK$99 for two.

The crazy sale period ends on May 25.

Unemployed Lee Cho-yee, 28, who lives in Kwai Fong, was the first in the queue that began forming at 6.15am. He said he was planning to spend HK$800, on a half-price frying pan and a bedroom suite discounted by 90 percent.

"Though I am unemployed, I am still willing to spend on household necessities, especially those which are good bargains," he said. Mok Lai-ying, a 50-year-old promoter, joined the queue five minutes after Lee. "I have no spending limit. I will buy whatever I think is worth it," she said.

Yata managing director Daniel Chong Wai- chung said there were 1,600 people in the queue by the time the store opened at 9am.

This was 30 to 40 percent more than the store's last big sale in November.

"Although they are more cautious about spending, consumers are prepared to spend more and wisely on necessities," Chong said. "We are optimistic about the market."

Hong Kong retail sales slump 4.4 percent in April
1 June 2009
Agence France Presse

Hong Kong retail sales slumped 4.4 percent year-on-year in April, the government said Monday, predicting that the figure was unlikely to improve in the near future.

The value of total retail sales in April amounted to 27.1 billion Hong Kong dollars (3.49 billion US), the Census and Statistics Department said in a statement.

After netting out the effect of price changes over the same period, the volume of total retail sales decreased by 5.5 percent in April compared with a year earlier.

The department said that retail sales staged a relative improvement in April, with the year-on-year decline tapering quite visibly in April from March, when the decrease was 7.7 percent.

It added the rebound in the local stock and housing markets, as well as the stable performance of inbound tourism in April, contributed to this.

However, it also noted that prospects in the near term were shaky because there was likely to be a fall-out from the impact of the human swine flu on tourism, and hence the retail business.

Hong Kong retail sales slump 6.2 percent in May
2 July 2009
Agence France Presse

Hong Kong retail sales slumped 6.2 percent year-on-year in May, the government said Thursday, as consumers continued to stay away from luxury goods amid the economic downturn.

The value of total retail sales in May amounted to 21.7 billion Hong Kong dollars (2.78 billion US), the Census and Statistics Department said in a statement.

After netting out the effect of price changes over the same period, the volume of total retail sales decreased by 6.4 percent in May, compared to a year earlier.

The volume of sales of motor vehicles and parts decreased by the most year-on-year, by 32.2 percent. That was followed by sales of jewellery, watches and clocks, and valuable gifts, which were down 10.9 percent.

However, the volume of sales of commodities in supermarkets increased by 0.6 percent in May when compared with a year earlier.

A government spokesman said the near-term outlook for retail business would continue to be affected by uncertainties over the pace of economic recovery and the impact of swine flu on tourism.

But he added that signs of economic recovery and the government's relief measures would provide some support to consumer confidence and retail trade.

Thomas Pink brings British luxury to Hong Kong
Friday, July 31, 2009
Government Press Release

Thomas Pink, the internationally renowned British luxury shirt-maker, announced today (July 31) the opening of its first boutique in Hong Kong. The new boutique is situated at Pacific Place, Admiralty, one of the city's luxury shopping malls.

Thomas Pink specialises in the design and production of quality shirts and associated accessories for men and women. The Hong Kong boutique will offer a wide range of luxury shirts in modern designs and quality fabrics, as well as a rich selection of ties and accessories to complement the garments. Each purchase will be wrapped in the brand's signature pink and black packaging.

Acquired by the LVMH Group in 2001, the Thomas Pink brand is rooted in the 18th century heritage of London's Jermyn Street and has built a reputation and following on its fine British shirt-making tradition. These days the brand has evolved with the times to incorporate fashionable styles and modern fabrics with traditional quality and craftsmanship.

In the twenty-five years since the brand's inception, Thomas Pink has experienced rapid growth to more than 80 boutiques and concessions worldwide, with presences in the UK, France, China, Mexico, Dubai, Singapore, Malaysia and the US. Its New York flagship store is the largest shirt store in the world.

Melcher's Group - Thomas Pink's franchise partner in Hong Kong - is responsible for the development of the brand in the Hong Kong and Macau markets. Next on the brand's agenda is additional retail outlets in Hong Kong.

Managing Director of Melchers (HK) Ltd, Mr David Reid, said, "Thomas Pink is an iconic British brand. The contemporary fashionable fabrics and styles based on traditional Jermyn Street tailoring will have a strong appeal to the professional and sophisticated consumers in Hong Kong who appreciate the meticulous attention to detailing, construction and quality."

President & CEO of Thomas Pink, Mr Jonathan Heilbron, commented, "As the leading international luxury shirt brand we are thrilled to be opening our first store in Hong Kong. Thomas Pink continues with its expansion plans across Eastern and Southern Asia with stores currently in Shanghai, Beijing, Singapore, Kuala Lumpur and Hong Kong is the next step in our store opening programme. Thomas Pink is looking forward to bringing the tradition of British shirt making direct to the people of Hong Kong in our own unique store environment."

Director-General of Investment Promotion, Mr Simon Galpin, welcomed the opening of Thomas Pink's first retail presence in Hong Kong. He said, "We are delighted to see such an iconic British brand establish itself in our city. Hong Kong offers a sophisticated consumer base with an appreciation of, and appetite for, quality luxury products. As Asia's shopping paradise Hong Kong serves as an ideal destination for international brands to gain exposure and reach within the region and especially in Mainland China."

"The presence of Thomas Pink in our city will strengthen our position as the most attractive shopping destination in Asia and we look forward to the brand's continued expansion in Hong Kong," he added.

Established in 1984, Thomas Pink is a leading luxury international shirt brand, specialising in the design and production of quality shirts and associated accessories for men and women. Thomas Pink is part of the leading luxury goods conglomerate, LVMH. It has 80 boutiques and concessions worldwide. The Hong Kong operation will be managed by Melchers Group, which plans to open further outlets in the city. For more information, please visit www.thomaspink.com .

Delay No Mall is no more - trendy store folds after failing to pull in shoppers
25 August 2009
South China Morning Post

Apparently, anywhere outside of Sogo or Times Square is just too inconvenient for shoppers to walk to. That's why the Delay No Mall is folding after just 18 months, says the founder of the boutique clothing retailer.

The two-storey mall building, next to the Regal Hotel in Yee Wo Street - just far enough from the main thoroughfare in Causeway Bay that patrons had to put in extra effort to get there - will be home to a Din Tai Fung restaurant, famous for its steamed dumplings, by the end of this year. Delay No Mall has already emptied out.

"The address is very awkward. It's very difficult to do retail. Of course, the fact that the economy was so bad didn't help," Delay No Mall's founder, Douglas Young Chi-chiu, said.

"I think it's tough because there's so much retail in Hong Kong and people go for convenience. I think, if it's food, people are willing to cross that extra street because food is essential, whereas the things we were selling in there were non-essentials."

The mall had a lot going for it, including an unforgettable name that, like its accompanying fashion concept, Delay No More, is a play on words, sounding like Cantonese foul language. The fashion line will continue and Mr Young will focus on G.O.D., his successful lifestyle retail venture. G.O.D. recently opened a new store at the Peak Galleria.

Mr Young said he initially agreed to take up the Causeway Bay space because he was under the impression the government was going to replace the elevated pedestrian roundabout with a zebra crossing to allow people easier access to the area. As the work never happened, the lack of foot traffic ensured the mall was doomed to fail.

Space in the mall was let out to retail tenants on leases as short as three months. All the tenants had already vacated the mall, he said.

"All in all, we decided instead of running a retail concept that is different from G.O.D., we should concentrate all our efforts into running G.O.D. and rent the building out to a restaurant so that they can occupy the whole space and we don't have to manage them," Mr Young said.

"We've always had a food element inside Delay No Mall and the food has always done so much better than retail. That is why we thought the food direction is definitely the one way to go."

Its website says the mall is "looking at an exciting change of concept to food and beverage".

To be fair, things in Delay No Mall aren't that special compares to the real G.O.D. design.

Hong Kong retail sales drop 5.4 percent in July
1 September 2009
Agence France Presse

Hong Kong retail sales dropped 5.4 percent in volume year-on-year in July, the government said Tuesday, adding that the fall was in line with narrowing monthly declines as the economy rebounds.

Total retail sales in July were 22.8 billion Hong Kong dollars (2.92 billion US), the Census and Statistics Department said in a statement.

Although sales volume fell, declines in recent months have stabilised to between 4.0 and 7.0 percent, the government said, after sales slumped by much as 12.6 percent in February.

Transactions for motor vehicles and parts decreased the most year-on-year, by 30.7 percent. That was followed by sales of footwear and other clothing accessories, which dropped 9 percent.

However, the volume of fuel sales increased by 4.9 percent year-on-year while jewellery, watches and clocks, and valuable gifts posted a 2.5 percent improvement.

The government said the slower declines in recent months reflected an improved consumer sentiment.

"The recent rebound of the economy, the resilience of the labour market, and the government's relief measures should render some support to consumer confidence and hence the retail trade," he said.

However, the spokesman also sounded a note of caution as the recovery prospects for the global economy remained uncertain.

Hong Kong retail sales climb 9.8 percent in October
1 December 2009
Agence France Presse

Tills in Hong Kong were ringing loudly in October as a pick up in tourism and a stronger economy boosted retail sales by almost 10 percent, according to official data.

The figures come two weeks after the government said unemployment fell for the second successive month and showed that the financial hub is recovering well from the global downturn.

Retail sales rose 9.8 percent year-on-year to 22.8 billion Hong Kong dollars (2.9 billion dollars US), the Census and Statistics Department said in a statement.

The figure beat a 7.6 percent rise forecast by 11 economists surveyed by Dow Jones Newswires.

Sales of footwear and clothing accessories led the increase with a 17.8 percent rise from a year earlier, the government said, adding that durable goods, such as household appliances, fuel and vehicles also rose.

The increase "signified a further revival in local consumer spending in tandem with the economic rebound," a government spokesman said in the statement.

"The pick-up in inbound tourism rendered an additional boost."

However, retail sales in the first 10 months of 2009 fell 2.2 percent from a year earlier, the statement said.

Crisis, high rents trim Bauhaus bottom line
The Standard
Thursday, December 17, 2009

Net profit for Bauhaus International (0483) for the six months ended September 30 fell 29.9 percent to HK$17.1 million due to high rents and the economic downturn.

An interim dividend of two Hong Kong cents was declared.

But the clothing retailer's revenue grew 1.8 percent from a year ago to HK$325.7 million as its retail operation rose 8.8 percent to HK$286.8 million during the period. A strong rebound in October and November lifted prospects. "We are optimistic about the upcoming Christmas and spring festival sales," financial controller Kingo Li said.

Revenues from Hong Kong and Macau will, however, be diluted by a surge in mainland growth, said executive director George Wong.

Bauhaus has 92 self-managed shops in the mainland, located mainly in Beijing, Shanghai and Guangzhou.

The number of stores is expected to increase to 100 before March.

Revenue from wholesale operations fell 36.4 percent to HK$17.3 million, as the European market was hit by the financial crisis. European sales fell 81 percent.

In terms of franchise business, sluggish retail consumption cut turnover by 26.3 percent to HK$21.6 million.

Emperor Group pays record price for shop in TST
The Standard
Tuesday, December 22, 2009

The Hong Kong property market hit another high yesterday as Emperor International Holdings (0163) spent HK$843 million to acquire a property at No6-8 Canton Road, according to market sources.

The 1,520-square-foot property fetched HK$554,605 psf. With a saleable area of 1,212 sq ft, the cost rose to nearly HK$695,545 psf.

Both the selling and psf prices of the property were record highs in the territory, breaking that set by a cosmetic chain in March 2006, which bought a 40 sq ft property at Sim City, Shantung Street, Mong Kok.

The current tenant of 6-8 Canton Road is Emperor Watch and Jewellery (0887), which pays a monthly rental of HK$1.4 million. The lease expires in July 2012.

The market sources said Emperor Group bought the property to allow its subsidiary to continue operating the business at the address free of worries about rising rents.

Emperor Group spent HK$170 million in 2007 on another shop at No4 Canton Road.

With a total area of 800 sq ft, the price came to HK$212,500 psf, making it the ninth most expensive shop in Hong Kong before the deal was struck on 6-8 Canton Road.

Wong Wai-man, director of Sheraton Valuers, said the price paid for 6-8 Canton Road is the most expensive on a psf basis.

Although expensive, Emperor Group bought the shop for its location in a booming area of Canton Road.

The shop is also across the road from a Louis Vuitton outlet, making it a natural fit for the Emperor subsidiary, according to Wong.

Hong Kong still ranks as the world's second most expensive retail rental market behind New York, despite suffering from the global economic crisis, with values of US$976 (HK$7,613) per sq ft per annum, according to study by CB Richard Ellis that was released on December 7.

"Rents in prime retail streets in Hong Kong have recorded strong support, as the retail market in Hong Kong continues to be boosted by mainland tourists," said Joe Lin, senior director of retail services of CB Richard Ellis, Hong Kong.

British retailer to pay a record HK$620psf for IFC Mall shop
25 January 2010
South China Morning Post

A British high-fashion retailer selling hair accessories and scarves has agreed to pay HK$620 per square foot to lease space at IFC Mall, a record for shopping centres in Central.

The retailer, which has not been named, will pay a monthly rental of HK$310,000 for the 500 sq ft shop, the company's first in Hong Kong. It sells an array of products, including a hair clip that retails in Britain for £5 (HK$63).

"It is a record in our mall," said Karim Azar, the assistant general manager for retail at IFC Mall.

Rents at IFC Mall increased more than 20 per cent last year to HK$250 to HK$620 per square foot per month, he said.

Last month, the shopping centre's top five tenants, most of which sell luxury watches and jewellery, paid as much as HK$1,500 per square foot a month, as the landlord would charge turnover rents instead of base rents if their sales exceeded a certain amount.

"These retailers generated exceptionally good business at Christmas," Azar said.

He said the mall's tenants had generated HK$6 billion in sales last year, about 25 per cent more than in 2008.

"Affluent mainland tourists now account for up to 30 per cent of shoppers," he said.

The complex had a waiting list of more than 100 potential tenants.

Helen Mak Hoi-lun, a senior manager of retail services group at Colliers, said IFC Mall's rents would be considered the highest per square foot among malls in Central.

The other shopping centre is the Landmark however the owner, Hongkong Land, does not provide rental figures.

Mak said small shops would easily pay higher rentals per square foot than retailers that took up a large amount of space.

For instance, luxury watch retailer Rolex has paid HK$1,200 per square foot or HK$1.2 million per month for a 1,000 sqft shop at the ground floor of Aon China Building at 29 Queen's Road, Central, since March 2008.

Mak was upbeat on both retail leasing and sales this year given the continuing influx of tourists and the likelihood that more international brands would resume their expansion plans as the economies of the United States and Europe continued to recover.

Last month, a shop in Tsim Sha Tsui was sold for HK$695,544 per square foot, setting a new record in Hong Kong.

Emperor International Holdings paid HK$843 million for the 1,212 sqft shop at 6-8 Canton Road.

Source : http://www.fotop.net/JACKLEE/JUSCO

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Lol at the man with crazy eyes in the second last photo!

Links... even JUSCO can't stand it.

Where are they moving to? Last summer I was at Lok Fu I was so surprised, I didn't even know they were undergoing construction and a lot of the shops weren't even there, everything was boarded up, tons of dust and nasty paint vapors.

Wound up disappointed since I went there (as I do every time I go to HK), but nearly everything was closed.

Where are they moving to? Last summer I was at Lok Fu I was so surprised, I didn't even know they were undergoing construction and a lot of the shops weren't even there, everything was boarded up, tons of dust and nasty paint vapors.

Wound up disappointed since I went there (as I do every time I go to HK), but nearly everything was closed.

I think JUSCO is gone completely, one less store in HK.
Someone else (believe it is Citistore 千色店) is going to move in in June or July after the renovation is done.

If I were living in Lok Fu, I would rather have a JUSCO, than a Citistore plus Park n' Shop / Wellcome.

What's the difference between Citistore and JUSCO?

I don't think I've been to a Citistore before, but I've been to the JUSCO at Kornhill, Quarry Bay. The best part is the supermarket since there are tons of free samples. You basically get a free lunch there :D

Links... even JUSCO can't stand it.

Oh it's part of the Link REIT empire? No wonder! The up-scalization of a public housing estate shopping centre at work again ...

Customers bid farewell to an `old neighbor'
1 March 2010
The Standard

Long-time customers flocked yesterday to Jusco in Lok Fu to bid farewell to the venerable department store.

The 148,000-square-foot outlet, which opened in 1991, will be relocated to MegaBox in Kowloon Bay in the middle of the year.

Shoppers yesterday hunted for bedroom accessories, household goods and clothes sold at heavy discounts.

Some wrote on a board, stating how much they will miss the ``old neighbor,'' while others praised the store's service and caring culture.

One customer wrote that the Lok Fu store forms part of her childhood memories, as she used to hang out there with friends after school, or with her grandmother on weekends. ``It was where I used to hang around for 18 years. I will miss it so much,'' the writer said.

Tang Chun-mei, 30, took pictures with her son.

``I have been living in Wong Tai Sin for more than 10 years. The store is where I spent my free time with friends and family,'' Tang said. ``I will miss it because it has become part of my daily life.''

Tang spent about HK$2,000 on blankets and clothes. ``The pricey items were really a bargain,'' she said.

Promoter Yip So-ching, 50, who worked at the store for about seven years, said that fellow workers and customers are all amicable and cordial.

``The most enjoyable part of my job is chatting with customers, especially the elderly, when we are not bogged down in work. We talk about everything,'' Yip said.

A saleswoman, surnamed Soo, had worked in the Lok Fu store for four years. ``There is care and congeniality. Everyone will miss it so much,'' said Soo, who will relocate to a new branch in Whampoa Garden. ``All my fellow workers will be dispersed to different stores. I hope I can get used to the new working environment.''

Kenny Young, 29, drove from Tsuen Wan with his sister and girlfriend to spend HK$1,800 on blankets, pots and underwear.

``Despite the fact the economy is recovering, shoppers still spend prudently for reasonably priced items,'' Young said.

A spokesman for the Link Reit said the department store APiTA is expected to open this year in Lok Fu Plaza.

The block vacated by Jusco will be renovated to improve movement between different sections of the mall.

HK Retail Sales Up; More Growth Likely Through 3rd Quarter
1 June 2010

HONG KONG (Dow Jones)--An improving job market and a rise in tourist arrivals sent Hong Kong's retail sales in April higher for the eighth consecutive month, and economists say the city's retail sector will probably enjoy a few more months of strong growth before consumers start feeling the impact of the European sovereign debt crisis.

The value of Hong Kong's retail sales in April rose 15.6% from a year earlier, the Census and Statistics Department said Tuesday. The growth rate was lower than March's 19.0% rise, but was in line with the median 15.6% forecast of nine economists surveyed earlier by Dow Jones Newswires.

Hong Kong's retail sales by volume rose 12.4% in April from a year earlier, slowing from March's 17.2% increase and below the survey's median forecast of 15.0%.

"The recently increased level of uncertainty in the external environment together with the consolidation in the asset market may temper somewhat the growth momentum of local consumer demand. However, the further expansion of inbound tourism should remain favorable for the retail business," a government spokesman said in a statement.

Tourist spending accounts for more than half of Hong Kong's retail sales. In April, visitor arrivals rose 14.6% to 2.8 million from a year earlier, 59% of which were from mainland China.

If the European sovereign debt crisis worsens and hits Asian economies, Hong Kong's retail sales should still remain strong into the third quarter, said Paul Tang, an economist at Bank of East Asia.

"Retail sales is a lagging indicator that is closely tied to local employment, which is still improving. The local stock market hasn't slid massively yet," Tang said.

Hong Kong's unemployment rate fell to 4.4% in the February-April period, its lowest level since the fourth quarter of 2008, after peaking at 5.4% in the middle of last year. Retail sales in Hong Kong started rising from a year earlier in September after falling for seven consecutive months.

Retail district rents lower
Last Updated: Monday, June 7, 2010 | 3:27 PM ET Comments1Recommend1
CBC News

Storefront rents in most of the world's priciest retail districts declined for a second consecutive 12-month period ending this spring, although signs suggested a rebound could be coming.

According to a survey by real estate consultants Colliers International, the Champs Élysées in Paris is the most expensive retail district in the world, with space going for an average of $1,255.90 US per square foot for a one-year lease, an increase over one year of 2.04 per cent.

Visitors walk between planted fields on May 24 after young French farmers transformed the Champs Elysees in Paris into a vast garden of flowers, herbs and crops. Store-front lease rates on the Champs Élysées are the most expensive in the world at $1,255.90 US per square foot on average.

But New York's Fifth Avenue saw rents drop by 10.71 per cent, with space now going for $1,250.

"Two sub-categories worth mention are financial centres, which are still sluggish but not to the same extent as a year ago, and tourism-dependent cities, which were more mixed but generally up relative to last year," Ross Moore, chief economist with Colliers USA, said in a statement.

"With many of the world's rich feeling more secure and comfortable with luxury purchases, demand for high-end retail premises is expected to increase over the coming year."

Russell Street in Hong Kong took third place, with an average rent of $1,205.46, which was up 1.3 per cent from the same period a year before.

Montreal's Saint Catherine Street and Toronto's Bloor Street were Canada's most expensive strips, with average lease rates of $300 Cdn. a square foot.

Montreal's rates were unchanged, but Toronto's rose 7.14 per cent from the same period a year earlier.

http://www.cbc.ca/money/story/2010/06/07/fashion-district-rents.html

For those in the know... is Russel St. the most expensive in HK? It seems absurd to me. Across from Times Square I can see a McDonalds, SaSa and KFC. I would imagine some of the streets in Central to be much more expensive.

Not sure how they sample, but I suspect it may be one street per city.

American Eagle To Open Stores In Hong Kong, China
9 June 2010
DOW JONES

American Eagle Outfitters Inc. (AEO) said it plans to open stores in Hong Kong and China, including three in early 2011.

Its shares were up 0.5% in recent trading to $12.13. The stock is down about 28% this year.

American Eagle has signed an exclusive franchise agreement with Dickson Concepts (International) Ltd., which operates more than 400 stores in Asia. It plans to open three stores in early 2011 in Hong Kong, Beijing and Shanghai.

The teen retailer has seen revenue increase from woeful prior-year levels in recent quarters, though its May same-store sales fell from last year and its latest-quarter profit fell by half on charges related to its failed MARTIN+OSA chain.

It currently ships merchandise to 76 countries from its online store and opened its first stores outside the U.S., in Dubai and Kuwait City, in March.

International sales are also seen as a possible area of growth for rival Abercrombie & Fitch Co. (ANF).

Gap To Open 4 Stores This Year As Expansion Into China Begins
24 June 2010
Dow Jones

Gap Inc. (GPS) said it plans to open two stores each in Beijing and Shanghai later this year and will offer online shopping in China.

The casual-clothing retailer said the store openings are part of a long-term expansion strategy that involves more stores in major regions, including Hong Kong, in the coming year.

Gap, the largest U.S. apparel chain, has opened franchised stores in markets from Turkey and Saudi Arabia to Romania and Mexico in the past two years. The China stores will be company-owned and -operated.

Gap with work with Shanghai Yi Shang Network Information Co. on its online business.

The company named Redmond Yeung, recently president and chief operating officer of China and Asia Pacific for Best Buy Co. (BBY) as president, China. Lorenzo Moretti, recently chief operating officer of China and president, East China, of supermarket chain Tesco PLC (TSCDY, TSCO.LN), was named managing director, China.

Yeung will lead business development and real-estate strategy, while Moretti will focus on store operations, product-to-market activities and infrastructure development.

They will be based at Gap's corporate China headquarters in Shanghai, and report to John Ermatinger, president, Asia Pacific Region.

Gap's shares closed Wednesday at $20.47 and were inactive after hours.

Esprit Plans Stores in 400 China Cities as Europe Sales Fall
September 02, 2010, 7:47 AM EDT

By Wendy Leung

Sept. 2 (Bloomberg) -- Esprit Holdings Ltd., the Hong Kong- based clothing retailer that derives 83 percent of its sales from Europe, plans to expand its operations to 400 Chinese cities as revenue from the continent declines.

Mainland China Esprit stores will increase 83 percent to 1,700 within five years to double the company’s sales because the world’s most-populous nation “represents the biggest growth opportunity,” it said in a statement today.

Esprit fell the most in three months in Hong Kong trading today after reporting an 11 percent drop in annual profit as weaker consumer spending in Europe drove sales down, prompting a decision to exit Norway and Portugal. Chief Executive Officer Ronald van der Vis said he may hire designers in China, where retail spending surged 18 percent in July from a year earlier.

“Net income in China should more than double over the next five years and margins will expand as the company achieves scale,” Matt Marsden, an equity researcher at Samsung Securities (Asia) Ltd. in Hong Kong. “Doubling revenue there over the next five years implies 15% growth per annum, which they should easily manage.”

Esprit plans to have stores in 400 China cities, more than double the existing 169, it said in a statement to Hong Kong’s stock exchange today.

China Outlets

Chief Financial Officer Chew Fook Aun said the biggest clothier listed in Hong Kong “hopes to open” at least 20 standalone stores in mainland China this year.

The company has 931 mainland Chinese points of sale, which include department-store counters and standalone stores. Sales for Esprit on the mainland, which excludes Hong Kong, Macau and Taiwan, were at least HK$793 million, 2.4 percent of the total.

“Europe’s consumer confidence doesn’t look very stable,” Chew said. “In the next few years, we are holding higher hopes on mainland market.”

Hiring Chinese designers would help Esprit expand in China, said Winnie Fong, an analyst at TaiFook Securities in Hong Kong.

Esprit slid 3.6 percent at the close in Hong Kong trading after its results announcement. The decline extended Esprit’s retreat this year to 17 percent, compared with a 4.6 percent drop in the benchmark Hang Seng Index.

Net income for the year ended June fell to HK$4.23 billion, or HK$3.34 a share, from HK$4.75 billion, or a restated HK$3.71, the clothing retailer said. That compared with an average estimate of HK$4.42 billion by 11 analysts surveyed by Bloomberg. Sales decreased 2.2 percent to HK$33.7 billion.

Same-store sales, which exclude the impact of newly opened outlets, fell 2.4 percent, the statement said.

Revenue Breakdown

“Closing loss-making stores in the U.S. and Europe is an excellent idea, which should boost profit margin,” Samsung Securities’ Marsden said.

Revenue from Europe fell 4.6 percent to HK$28 billion ($3.6 billion). The retailer’s sales in Germany, its biggest market, decreased 4.4 percent to HK$14.8 billion. In local- currency terms, Germany sales dropped 6 percent.

Revenue from Asia rose 11.5 percent to HK$4.63 billion during the fiscal year and U.S. sales climbed 10 percent to HK$526 million.

Esprit “is underpenetrated” in Chinese cities including Guangzhou, Dalian, Chengdu and Chongqing, Chew said. There’s also potential to expand in Beijing, where the market is still growing, the chief financial officer said.

Esprit cut capital expenditure to HK$1.51 billion from HK$2 billion, with HK$576 million spent on new stores.

The company proposed a final dividend of 67 Hong Kong cents a share. It won’t pay a special dividend. Esprit paid a special dividend of HK$1.33 per share last year.

--With assistance from Wing-Gar Cheng in Hong Kong. Editors: Frank Longid, Stan James

http://www.businessweek.com/news/2010-09-02/esprit-plans-stores-in-400-china-cities-as-europe-sales-fall.html

More American's apparel brands are coming to town.


DECEMBER 5, 2010, 11:18 PM HKT
Foreign Fast Fashion Swoops In

By Cathy Yan

http://s.wsj.net/public/resources/images/OB-LC097_fashio_G_20101130010203.jpg

Foreign luxury brands are well acquainted with Hong Kong’s consumer market, but now cheaper foreign labels are moving in too.

In September, Swedish brand Monki, a low-priced womenswear line, opened its first store outside of Europe in Hong Kong’s Langham Place shopping mall. Next year, Hong Kong will welcome U.S. ready-to-wear labels Gap, Forever 21 and American Eagle. These brands, known for affordable, trendy and disposable clothing, will join foreign-owned H&M, Zara, Mango and Uniqlo outlets already in the city.

Mass apparel labels are not new to Hong Kong. Publicly listed Giordano and Bossini have been around since the 1980s, selling basics in dozens of outlets around the city and expanding into Taiwan, southeast Asia and China. But the influx of foreign “fast fashion” brands is putting pressure on Hong Kong institutions to re-evaluate their marketing, pricing and expansion strategies.

“There are two implications for local brands,” said Eddie Lau, Citibank’s head of regional consumer research. “First, there will be more competition for property, particularly prime locations. Second, they will have to rethink their merchandising and brand equity.”

Giordano has a market cap of 7.25 billion Hong Kong dollars (US$934 million), less than 10% of Gap’s and a quarter of American Eagle’s. Large foreign brands have the scale to outbid local competitors when it comes to real estate—and drive up prices.

In June, it was announced that the new Forever 21 flagship store will take over a five-floor space in Causeway Bay currently leased to Giordano. Giordano was paying HK$5.5 million a month in rent; Forever 21 will pay close to double that at HK$11 million.

Average retail rent in Hong Kong’s four traditional shopping districts—Tsim Sha Tsui, Mong Kok, Central and Causeway Bay—increased 2.7% in the third quarter of 2010, compared with the prior quarter, according to Colliers International. Colliers expects another 10% increase in the next 12 months.

“What can you do?” replied William Yue, the director of corporate and external affairs at Giordano, about the move. “We just didn’t feel that the economics would work at that level. Every company has its own calculations.” He said Giordano is now looking at secondary, “off-the-beaten-track” streets in Causeway Bay.

Both Giordano and Bossini have increased profits during this year’s retail boom, while shifting their focus from Hong Kong to China, where the returns are far greater.

Giordano closed 30 Hong Kong stores in the past three years but opened 341 in China over the same period. Mainland Chinese sales increased 15.7% year-over-year for the first half of 2010, constituting 37% of total year-to-date sales. Hong Kong, meanwhile, made up only 18% of total sales. Likewise, competitor Bossini opened 182 new stores in China in the past three years.

Some local brands are also adopting a trendier product mix. Although Mr. Yue said he didn’t see the likes of H&M and Forever 21 as direct competitors (“We’re not as fashion-forward as those people”), he added that Giordano is aggressively pushing its edgier BSX line, which is targeted at young women and priced about 20% higher than the main line.

G2000, a local brand known for basic work apparel, is restyling its fall 2010 womenswear line to be more fashionable, with slimmer cuts, trendier styles and accessories.

Other brands are “being marginalized and forced to compete on prices,” lowering their target segments from mid-income to lower-income customers, Mr. Lau said.

“There’s always a very high risk with fashion,” he said. “And local operators have to learn how to deal with it.”

http://blogs.wsj.com/hong-kong/2010/12/05/foreign-fast-fashion-swoops-in/

Mainlanders bus to HK in blitz on malls
21 January 2011
The Standard

The tables have turned - shoppers from the mainland are hitting local shopping malls in organized groups to buy Lunar New Year items.

In Diamond Hill's Hollywood Plaza, Shenzhen resident Irene Lai Yen-fen, 28, arrived with a busload of 40 shoppers yesterday, the third Lunar New Year shopping group to visit the mall.

In less than 30 minutes, her shopping bag was full with dried seafood bought for more than HK$1,000.

Lai said the same seafood would cost 10 to 20 percent more in Shenzhen.

Lai said it was her third trip with the shopping group, which offers a free shuttle bus from Shenzhen to Hong Kong's shopping malls.

``It's convenient and I can travel to Hong Kong malls directly for quality products. I'm budgeting about HK$4,000 for Chinese New Year items,'' she said.

Hollywood Plaza said it will soon team up with one of the largest group shopping websites on the mainland _ tuan.qq.com _ offering a 10-yuan (HK$11.81) coach fare from Shenzhen Great Theater to the plaza.

The mall's promotions and advertising manager Candy Lo Hang-yee said mainland netizens can start to register online from January 24 and she expects all the 2,011 coach tickets will be sold out in two to three hours. ``We expect about 3,000 mainland visitors to spend between HK$5,000 and HK$8,000 each in our mall, bringing us HK$20 million in sales,'' Lo said.

Lo said those unable to get the 10 yuan ticket would have to pay about 100 yuan for the round trip.

The QQ shopping website is one of the largest for online shoppers with more than 100 million mainland users and more than 100,000 from Hong Kong.

But the spending spree is raising eyebrows of Hong Kong housewives, who fear it will drive up prices.

One housewife, surnamed Lau, 55, said shops selling dried seafood had already raised their prices. ``It costs me HK$850 per catty of sea cucumber, HK$50 more that it was two months ago,'' she said.

``I'll probably have to spend more than my original budget of HK$5,000.''

The tours have also caused concern at the Travel Industry Council.

Executive director Joseph Tung Yao-chung called on the government to check if they should be subject to the new tour regulations.

``The problem is not how cheap is the coach fare or whether the malls are reputable, but whether they involve tourism activities. Only registered parties can provide such services,'' he said.

Malls roll out red carpet for mainlanders
26 January 2011
SCMP

Hong Kong retailers are rolling out their red carpets, along with free bus rides, wine, theme park tickets - and even "pudding tours" - to lure mainland shoppers into their malls before and during the Lunar New Year.

"They [mainlanders] like those promotional offers and are attracted by them," director of Times Square, Leng Yen-thean, said, adding that the growing number of mainlanders visiting the mall had boosted its full-year sales revenue to a record high of HK$7.4 billion last year.

Shoppers who spent at least HK$5,000 at the Causeway Bay complex, owned by Wharf (Holdings), between next Wednesday and Sunday, would be given two tickets to Ocean Park, a destination that is popular with mainland visitors, and Leng expected retail sales and traffic volume at the mall to be up 15 per cent and 10 per cent respectively compared to the same period last year.

Hollywood Plaza, located away from the tourist destinations of Tsim Sha Tsui and Causeway Bay, would spend some HK$900,000 on promotions targeting mainland consumers during the Lunar New Year festival.

The promotions planned for the mall, in Diamond Hill, included an offer of free coach transport and lunch for about 450 mainlanders travelling from Guangzhou.

"We will offer them a free trip and lunch at the mall, where they will also get some welcome gifts including discount coupons and cash vouchers from our tenants," said the mall's promotions and advertising manager, Candy Lo Hang-yee.

Mainland shoppers would also be given additional gifts based on their actual spending at the arcade, and Lo said shoppers who spent HK$500 would get a bottle of red wine, while those who spent HK$2,000 could choose either a digital camera or mobile phone as a reward.

Lo said such promotions had proved effective in the past and mainlanders contributed about HK$170 million, or 7 per cent, of the mall's total sales revenue last year. She expected the contribution to increase to around HK$300 million this year because of the high inflation rate on the mainland and the appreciation of the yuan.

Sun Hung Kai Properties, a pioneer of free group tours to bring mainland visitors to its malls, has launched several "theme tours" to attract visitors this year.

"For example, we have the pudding tour which will bring visitors here to learn how to make Lunar New Year puddings in Hong Kong," said Maureen Fung Sau-yim, general manager of Sun Hung Kai's leasing department.

"We will also organise some luxury new year goods tours for shoppers who are keen to buy dried seafood, abalone, bird's nest and health products."

To boost sales, the developer even gives the tour group participants a pre-order form with items offered by its tenants before their trip, so that they can make orders in case they do not have sufficient time to visit all shops in the arcade. Since all malls in Hong Kong would be engaged in a competitive battle to attract mainland visitors, such promotions were important because many mainlanders had been to Hong Kong before and would be looking for a novel experience, Fung said.

Of the HK$13.5 million investment by Sun Hung Kai on Lunar New Year promotions at its 11 malls, up to 40 per cent targeted the mainland market, she said. That included organising 40 group tours bringing up to 2,000 people to its malls which was expected to boost its sales by HK$15 million.

However, some shopping mall operators believe having the right mix of tenants is more important in wooing shoppers from the north.

"They will come to your mall if you have the right strategies and tenant model which fits their preference and lifestyle. This is more important," said MTR Corporation's general manager of investment property, Betty Leong Sin-ling, who manages Elements at West Kowloon.

"They now come all year round, including the periods when luxury brands offer private sales," she said. "They are looking for some special and unique items too."

Therefore, apart from investing more than HK$20 million on Lunar New Year decorations and treats such as free cash coupons, beauty products and hampers for tourist who spend from HK$2,000 to more than HK$33,888, the mall is bringing in luxury brands to build a watch and jewellery display area to appeal to affluent mainland visitors.

On average, mainland shoppers spend between HK$15,000 and HK$20,000 per person at the mall, she said, and more than half of that amount was spent on watches and jewellery.

Leong expected that traffic and sales revenues at the mall would achieve record double-digit growth during the Lunar New Year, compared to the same period last year.

Christian Dior expands and reopens its Asian flagship store in Hong Kong
Friday, January 28, 2011
Government Press Release

Christian Dior today (January 28) announced the opening of its newly renovated three-storey Asian flagship store in Hong Kong after eight months of expansion and renovation. The outlet is located at One Peking Road, Tsim Sha Tsui, Kowloon, and was designed by renowned American architect, Mr Peter Marion.

Founded by French designer Mr Christian Dior in 1947, the luxury brand is a prominent and world-renowned fashion brand.

Regional Managing Director of Christian Dior Asia Pacific, Mr Diego Menarin, is excited about the reopening of the boutique and delighted to see its expansion in Hong Kong. Christian Dior's Hong Kong office has always served as the regional office for Asia Pacific, and oversees its business operations including marketing and promotion, business planning, merchandising and retail operations in more than 10 markets, namely Hong Kong, Macao, Mainland China, Korea, Singapore, Thailand, Malaysia, Indonesia, Australia, New Zealand, Guam and Saipan.

Christian Dior has also expanded and enhanced its Hong Kong retail outlet, which will create additional jobs in the city.

Director-General of Investment Promotion at Invest Hong Kong, Mr Simon Galpin, said, "We are delighted to have Christian Dior set up its Asian flagship store in our city. In view of Christian Dior's positive investment in the expansion of its retail presence, the increased job opportunities and the exposure in Hong Kong, the brand's new store will help cement Hong Kong's position as the undisputed luxury retail capital in Asia."

Mr Galpin said that Hong Kong remains an attractive destination for retailers to establish their operations, to reach both locals and visitors. According to the Hong Kong Tourism Board, provisional total visitor arrivals in 2010 exceeded 36 million, including some 22 million visitors from Mainland China. Mainland visitors continue to flock to Hong Kong for its choice of luxury brands, the price (no VAT or sales tax) and the wide range of items.

"These visitors provide prominent luxury brands, like Christian Dior, with huge opportunities for growing their business. We congratulate the brand on the grand opening of its Asian flagship store in Hong Kong today and wish the company every success in its business in our city and the region," Mr Galpin added.

About Christian Dior

Founded by French designer Mr Christian Dior in 1947, Christian Dior is one of the world's most prominent luxury brands. The business was one of the first to exploit the cachet of being a haute couture house by diversifying into ready-to-wear fashion and perfumes and entering new geographic markets. For more information, please visit www.dior.com.

China milk powder demand leaves Hong Kong shelves bare

HONG KONG, Feb 1 (Reuters) - China food safety concerns and a strong currency are prompting a flood of Chinese parents to sweep supplies of milk powder from Hong Kong shop shelves, triggering citywide shortages and angering parents.

Two years after the melamine-tainted milk powder scandal hit mainland China and made nearly 300,000 children sick, problems have continued to undermine Chinese public confidence including the seizure of over 100 tonnes of tainted milk powder last year.

Such entrenched product safety concerns have fuelled rapid growth in whole milk powder imports to China, which nearly doubled to an estimated 340,000 tonnes in 2010, making China the world's largest market for such infant formula.

A lucrative and booming parallel market has emerged in southern China, with Hong Kong's high quality and regulated infant formula brands proving popular with Chinese parents streaming across the border to sweep up stocks, leaving shelves bare for popular brands.

Hong Kong, a former British colony, returned to Chinese rule in 1997.

"As a parent, of course we hope our children are healthy so a little inconvenience is worthwhile," said Chinese mother Wang Lan, who was buying six tins of Holland-made Frisco milk powder in the Hong Kong border town of Sheung Shui that has become a hot spot.

"Those who are able to come will often come across to buy now," Wang added.

Grey market traders have also piled into the trade, employing mules who are regularly seen on the streets of Sheung Shui, shuttling boxes of formula up north by train on trolleys where they're sold for a large mark-up profit.

The rise in China's currency, the yuan, against the U.S.-dollar-pegged Hong Kong dollar, has also made the city's products relatively cheap.

"Even if we get one hundred boxes (of milk powder), I'm honestly telling you, within two or three days I can sell everything," said Alan Kwok, who runs a small dispensary in Sheung Shui.

"There are a lot more people snatching milk powder from Hong Kong," Kwok added, saying sales had surged 40 percent this year.

The shortages have sparked a tide of complaints from Hong Kong parents, who've had to scour stores for increasingly scarce tins in recent weeks, forcing some, in extreme cases, to feed their babies bread or noodles instead.

Several hundred parents recently launched an online petition calling for explicit curbs including the implementation of a milk powder tax for those taking Hong Kong milk powder into China.

Some major brands, like Mead Johnson Nutrition , have now pledged emergency measures. Elaine Chow, an employee with the firm in Hong Kong, said it was setting up an ordering hotline for parents and would release an extra 420,000 tins of formula in the next two weeks to meet demand.

"They (the milk powder brands) should have adequate experience to handle this emergency situation," Connie Lau, the head of Hong Kong's Consumer Council, told Reuters.

A&F coming soon to Central
The Standard
Monday, May 16, 2011

Despite high operation costs in Hong Kong, American casual-wear firm Abercrombie & Fitch is keen to join the city's crowded high- fashion sector.
And a flagship store will be ready to do business here as early as next year.

The SAR will be the second Asian stop, after Tokyo, for the brand known for its topless muscular salesmen.

"China represents a great opportunity for our brands," spokeswoman Iska Hain said.

A&F will also open a local Hollister store later this year. The lifestyle brand is a lower- priced A&F subsidiary targeting teens.

"A&F in Hong Kong is slated [to open] in 2012," Hain said.

The flagship store will pay a monthly rent of HK$7 million - the highest rental deal inked so far this year - taking over the Shanghai Tang site at Pedder Building in Central. Asked how a firm selling casual clothes can afford the rent, Hain refused to comment.

But she said the brand has positioned itself as "casual luxury" and will use a pricing strategy similar to those in in place in its other international markets.

A&F clothing has a high recognition value among youth, and claims to use fine materials to make casual outdoor wear.

Prices outside the United States are almost double those at its American stores, where a T-shirt costs an average of US$40 (HK$312).

The brand entered the luxury sector in 2005 when it opened a flagship store on New York's famed Fifth Avenue alongside other upscale retailers.

Since then, it has expanded overseas, having opened shop in London in 2009.

Last Thursday, the apparel chain opened a flagship store on Paris' legendary Avenue des Champs-Elysees. Despite the hefty price tags, the 119-year-old brand has been able to draw youngsters worldwide.

The firms US stores have also long been popular with Asian tourists.

But being popular may not always be a good thing. A&E clothing is among some of the most counterfeited in Asia, including Hong Kong, prompting the firm to even hire a former US federal investigator.

In view of the heavy demand, A&E is naturally eager to open a Hong Kong outlet so locals can buy authentic products, Hain said.

Another American casual wear brand, American Eagle Outfitters, was introduced to the local market earlier this year.

The international expansion plan of the company seems to be have paid off as its stock has risen 78 percent on the New York Stock Exchange over the past twelve months.

Beware the next time you encounter an unheard-of brand. It may have already met its end in more sophisticated markets.

Tired Western brands find new life in Asia
8 September 2011
Associated Press

HONG KONG (AP) — Faded and forgotten Western brands are being dusted off and brought back to life by companies in Asia targeting the burgeoning number of people looking for labels to match new middle class lifestyles.

Asians have been buying or licensing fashion names — many of them European with long and rich histories including royal connections or haute couture origins — that have fallen out of favor back home, as they seek to lure the region's newly affluent.

Among them are Aquascutum, founded in 1851 and whose trenchcoats were worn by British officers in the Crimean and two World Wars. The British label was popular with movie stars in the 1950s and '60s but in later years its appeal fizzled. Various owners tried to turn it around before a Hong Kong company snapped up the Asian rights in 2009 and now runs dozens of Aquascutum stores in China and elsewhere.

Meanwhile, Westerners are picking up on the idea, with one British startup aiming to bring dormant luxury pen, whisky and British butcher shop brands to Asia's growing middle classes.

The strategy of acquiring and revitalizing tired brands has proved to be especially successful in China, home to a huge number of nouveau riche combined with a culture that is extremely brand and status conscious.

China is forecast to be the world's third-largest luxury market within five years, according to a survey by Bain & Company released in May. Taking into account purchases made abroad by globe-trotting Chinese, they are already the second-biggest spenders on luxury goods, experts at Bain said. China's demand for brand-name consumer goods is also reflected in Italian fashion house Prada's listing this year on Hong Kong's stock market.

"Chinese are a lot more brand driven than other countries, and also they have rapidly increasing income but their brand product knowledge is sort of behind their spending power. That creates an interesting opportunity," said Vincent Lui, a Hong Kong-based partner at Boston Consulting Group.

While top-tier brands such as Gucci or Chanel may be out of reach, it's possible for companies to buy up lesser known second- or third-tier brands, Lui said. "Then you sort of repackage it in China, you try to rejuvenate it here — it's kind of hard to rejuvenate it somewhere else. Here you're starting with a blank sheet of paper."

A pioneer of this strategy is Hong Kong-based Trinity Ltd., which owns or licences a handful of heritage British and Italian menswear labels that have been elbowed aside in their home markets by newer fast-fashion outlets.

Three years ago, Trinity bought Kent & Curwen, an English clothing label that started out making school, club and regimental military ties in 1926. The brand's website features faded black and white images of sportsmen wearing cricket whites aimed at evoking English traditions.

"It's really propagating the story that these brands have strong heritage, long history and the Chinese customers believe in it," said Sunny Wong, the company's group managing director.

"It's very common to find customers walking into a shop and spending a long time in the shop not only trying on clothing they like but asking, 'What is this brand?' There's a big curiosity in why a brand can be so active over 200 years or more."

Trinity operates 95 Kent & Curwen stores in mainland China but the name has nearly disappeared in Britain, where it only has one shop.

But don't tell that to the mainland Chinese tourists who flock to neighboring Hong Kong for upmarket shopping and believe such brands remain coveted in their places of origin.

"Living standards for people in China have improved so we would like to buy these international brands," said a man who only gave his last name Jiang, from Dongguan in southern China, as he browsed at the Kent & Curwen outlet in an upscale Hong Kong mall.

Trinity is also the Asian retail licensee for Gieves & Hawkes, a storied Savile Row tailor with a stuffy reputation that is best known for dressing Prince William for his wedding to Kate Middleton. The tailor, which is owned by another Hong Kong company, Wing Tai Properties Ltd., has a history stretching back to 1771 and boasts three royal warrants, signifying its status as an approved supplier to the royal family.

Earlier this year, Trinity purchased French fashion label Cerrutti 1881, founded by Italian designer Nino Cerrutti, who gained fame in the 1980s for outfitting stars such as Michael Douglas, Richard Gere and Bruce Willis in their movies.

Trinity, controlled by Hong Kong-based sourcing company Li & Fung Ltd., now has about 330 stores in mainland China under various labels, and plans to open 50 more by the end of the year.

Hong Kong's YGM Trading Ltd., which has the Asian rights to the Aquascutum clothing brand that describes itself as "quintessentially British," operates 59 Aquascutum outlets in mainland China and 32 in Hong, Macau and Taiwan.

Chinese conglomerate Fosun International bought a 7.1 percent stake last year in French resort operator Club Med, becoming one of its biggest shareholders in a partnership aimed at making China the second biggest market for Club Med in the next five years. The French company, founded in the 1950s, had pioneered all-inclusive vacation packages but by 2000 had an outdated image.

Adult magazine publisher Playboy Enterprises Inc., which has seen its profits and popularity hit by competition from adult websites, has been licencing its name in merchandising deals across Asia and to a nightclub in Macau as it seeks to regain profitability. The trend has caught the attention of a group of British investors, who started a company aimed specifically at finding forgotten brands and reviving them.

Since it was founded in 2009, the Brand Cellar has bought 10 mostly forgotten British brands, seven of which are more than 100 years old. In June, the company opened an office in Hong Kong, where its chief executive is now based.

"In Asian markets, what were finding is that there's a real respect for the gravitas and depth of a brand because everything else here is vibrant and brash and new and exciting, and that's great but it means there's a premium on history and authenticity if you can make it relevant," said Andrew Harrison, the company's global brand director.

Harrison said the company is in talks with distributors in Hong Kong and India and hopes to launch two to three of the brands in Asia by the end of the year. Companies in its stable include a Scotch whisky maker, a British butcher and Conway Stewart, a bespoke fountain pen maker founded in 1905 whose writing instruments were used by Winston Churchill.

The company's experts have come up with a brand new marketing theme for the pens, including a new logo consisting of the company's initials, with a C flowing into an S laid on its side so that it looks like a figure 8 — an auspicious number in Chinese culture because the number rhymes with the word for prosperity.

Daikokuya-Tokyo opens first overseas store in Hong Kong
Monday, December 19, 2011
Government Press Release

Daikokuya-Tokyo, which sells second-hand luxury brand products, today (December 19) opened its first overseas outlet in Hong Kong, taking advantage of the city's booming luxury retail market and low tax regime.

The Japanese-owned store located in the heart of Tsim Sha Tsui will offer customers a new choice in buying and selling second-hand luxury brand watches, bags and jewellery. The large number of high-spending Mainland Chinese customers and locals looking for genuine luxury goods attracted Daikokuya to Hong Kong.

The Daikokuya Chairman, Mr Minoru Matsufuji, said, "We are drawn by the unique cluster of high-spending customers in Hong Kong, both from the Mainland and locally. This potential is not found anywhere else in Asia, so we think there are promising prospects in Hong Kong."

Mr Matsufuji added that the city's low corporate tax rate, at 16.5 per cent, added another incentive for a debut in Hong Kong.

Headquartered in Tokyo, Daikokuya's operation in Japan involves mainly the buying and selling of second-hand luxury brand products, but it also offers discount tickets and a pawn service to customers.

According to Mr Matsufuji, the Hong Kong store will be a local office and mainly involved in the buying and selling of second-hand luxury products imported from Japan. But expansion is likely. He said, "We would like to open more shops in Hong Kong depending on how quickly business develops."

The Associate Director-General of Investment Promotion, Mr Andrew Davis, welcomed Daikokuya's opening in Hong Kong, saying it is testament to the city's attractiveness for foreign investors. "The booming retail sector in Hong Kong offers a very strong customer base, especially with so many high-end customers from the Mainland finding genuine luxury products in Hong Kong. The arrival of high-end stores like Daikokuya will add impetus to the industry and offer customers a wider array of choices," he said.

Mr Davis added, "We wish Daikokuya every success in Hong Kong and we look forward to continuing our support for its future expansion in our city."

Starting a business in Hong Kong, for companies large and small, has become easier with the launch of the Government's electronic incorporation service in March 2011. The time required for company incorporation and business registration has now been significantly reduced from four working days to one.

About Daikokuya-Tokyo

Founded in 1979, Daikokuya is a renowned second-hand brand retailer with a chain of 136 directly owned or franchised stores across Japan. The company's operation in Japan involves mainly the buying and selling of second-hand luxury brand products, but there are also sales of discount tickets in addition to a pawn service for customers. For more information, please visit www.e-daikoku.com.

About Invest Hong Kong

Invest Hong Kong is the department of the Hong Kong Special Administrative Region Government established in July 2000 to take responsibility for Foreign Direct Investment and support overseas and Mainland businesses to set up or expand in Hong Kong. It provides free advice and customised services to help businesses succeed in Hong Kong's vibrant economy. As it celebrates its 11th year of operation, Invest Hong Kong has completed over 2 300 investment projects creating more than 28 000 new jobs in the first year of operation or expansion and $60 billion of investment. For more information, please visit www.investhk.gov.hk.

For event photos, please visit www.flickr.com/photos/investhk/sets/72157628479757089/.

Local tills still ring as retail sales jump 23pc
The Standard
Friday, February 03, 2012

Residents and visitors spent HK$1.3 billion a day in December, driving retail sales during a month of festivities and year- end celebrations.

Retail sales soared 23.4 percent in December from a year ago to HK$43 billion, unchanged from November's growth rate. In volume terms, sales gained 17.1 percent year-on-year in December, versus November's 16.9 percent gain.

Most shoppers spent their money on a variety of consumer durable goods.

"Improved income conditions should continue to augur well for the retail business in the near term," a government spokesman said yesterday. But a Morgan Stanley report warned domestic demand could face its "real test" this year amid signs of asset prices and the labor market weakening.

The dozen shopping malls operated by Sun Hung Kai Properties (0016) recorded combined revenue of HK$12.9 billion last year, up nearly a third from a year back. Malls leasing manager Maureen Fung Sau-yim attributed the sales to more mainland visitors and the strength of the yuan

"Local people also increased spending with the government's HK$6,000 payout."

Visitor traffic at the firm's 12 malls rose more than 10 percent on-year to 425 million. Hysan Development (0014) said spending by mainland buyers surged by 80 percent last year.

Chief executive Gerry Yim Lui-fai expects the rents of offices and shopping malls to rise this year.

Islanders envy our buying boom
The Standard
Wednesday, February 08, 2012

Taipei 101, an imposing skyscraper in Xinyi district, and the Eslite Bookstore are two of the must-see places for visitors to Taiwan.

The bookstore has been upgraded since my last visit and is bustling with eager "bookworms." The bottom floor, meanwhile, is leased to the agnes b. cafe which sells pricey drinks.

I do not know who the landlord is, but judging by the shop mix, the presence of Eslite has definitely boosted the value of the mall.

A Causeway Bay mall had reportedly offered Eslite tenancy at a bargain rate to attract more shoppers.

On the economic front, the Ma Ying-jeou administration has been fostering economic ties with the mainland, and island industries benefit the most.

Taiwan as a whole will continue to benefit from its close ties with the mainland.

However, the island does not profit a lot from mainland visitors because they don't splurge in Taiwan as much as they do in Hong Kong or Macau.

Incidentally, as Macau becomes a more expensive holiday destination, Hongkongers go to Taiwan instead.

My car driver said that mainland visitors to Taiwan make only small purchases of souvenirs and gifts.

Since Taiwan does not offer much duty- free shopping, mainland visitors are not encouraged to go on buying sprees as they do in Hong Kong.

Building a gaming business like Macau is out of the question for Taiwan because the local people would put up a fight.

This is a situation the government does not want to see or deal with.

My driver, clearly envious of Hong Kong, said the few thousand dollars spent by each mainland visitor hardly benefits retailers in Taiwan.

In Hong Kong, some residents resent visitors from the mainland and make a big fuss about them coming over to give birth and snapping up luxury goods.

Islanders simply think we don't appreciate our good fortune.

Siu Sai-wo is chief editor of Sing Tao Daily

Shoppers power healthy Lifestyle
The Standard
Tuesday, February 28, 2012

Sogo department store operator Lifestyle International Holdings (1212) booked a net profit of HK$1.88 billion last year, up by 34 percent thanks to a retail boom in Hong Kong.

The company declared a dividend of 44.9 HK cents, up by 33.7 percent from 2010.

Revenue, driven largely by sales at Sogo stores in Causeway Bay and Tsim Sha Tsui, rose by 18.9 percent to HK$5.13 billion.

Sales at these two stores made up a total 73.2 percent of total revenue.

Revenue from Sogo Causeway Bay alone was up by 23.2 percent.

Sales at its four mainland malls in Shanghai, Suzhou, Dalian and Tianjin that operate under the Jiuguang brand hit HK$3.22 billion. All stores, except Shanghai Jiuguang, is less than two years old. Same-store sales growth was 7.8 percent, a 10 percent drop.

The gross profit margin rose 1 percent to 58.5 percent last year, but the average concessionaire rate was 0.1 percent lower at 22.2 percent.

"We are optimistic about the local retail market this year, and it will continue to outperform the mainland market," said managing director Thomas Lau Luen-hung.

Lau added the firm was exploring new opportunities, especially in Shanghai, where its second store may open in 2016. Lifestyle International shares eased 0.1 percent to HK$19.9 yesterday.

Abercrombie Seen Inviting LBO as Bullish Options Surge
Bloomberg Excerpt
Mar 20, 2012 10:53 PM GMT+0800

For private-equity shoppers, no teen-clothing retailer in America is offering a bigger bang for the buck than Abercrombie & Fitch Co. (ANF)

Abercrombie, which lost about half its value as markdowns depressed profit in the past two quarters, rallied twice as much as its competitors this month as takeover speculation emerged. The company still trades at 4.4 times analysts’ average estimates for earnings before interest, taxes, depreciation and amortization through 2015, less than any of its closest comparable retailers, according to data compiled by Bloomberg.

With Chief Executive Officer Michael Jeffries predicting last month a rebound in international sales that could help Abercrombie double free cash flow to a half-billion dollars in three years, Morningstar Inc. and Cowen & Co. say it is an attractive target for a leveraged buyout. Options traders are also bullish on Abercrombie, with calls exceeding puts by the most in 19 months. The retailer could get at least $70 a share in a takeover, Cowen estimates, or a 34 percent premium.

“It’s got all the characteristics you like to see” for an LBO, R.J. Hottovy, director of consumer research at Chicago- based Morningstar, said in a telephone interview. “It’s relatively debt free, has a strong cash-generation profile, and ultimately a business that can be monetized. These teen apparel guys make a lot of sense for private equity buyers.”

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Global Franchise

Abercrombie may attract interest from private equity firms as it cuts costs and expands overseas, which will increase the retailer’s ability to generate cash to fund a leveraged buyout, according to John Kernan, an analyst at Cowen in New York.

The company plans to open flagship locations this year in Hong Kong, Amsterdam, Dublin, Hamburg, London and Munich, as well as 40 Hollister-brand stores outside the U.S. It also intends to close 180 underperforming stores by 2015.

International sales growth, along with its investments in the online business, will help boost profit in the fiscal year that began in February, Abercrombie’s Jeffries said last month.

“It’s one of those global franchises,” Dan Veru, who oversees $3.4 billion including Abercrombie shares as chief investment officer of Fort Lee, New Jersey-based Palisade Capital Management LLC, said in a telephone interview. “It’s not a niche, it’s a global franchise, in our opinion. While they maybe were a little bit too bullish with too much inventory going into the holiday season, it wasn’t catastrophic.”

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Right connections for ferry terminal
The Standard
Thursday, March 22, 2012

Many brand-name stores are keen to set up new retail outlets on Canton Road in Tsim Sha Tsui - dubbed the "shopping mecca" for big- spending mainlanders - but cannot secure space there.

Sino Group, which holds a controlling interest in the China Hong Kong City commercial complex that houses the China Ferry Terminal, is reconfiguring the layout of the buildings to meet that demand.

Adjacent to Harbour City, China Hong Kong City's volume of visitors is substantial, but its customer profile is different as ferry passengers bulk up the numbers.

With retail space at Harbour City and malls across the road not only expensive but almost impossible to get, it's logical for China Hong Kong City to try to catch the spillover demand.

An associate director at Sino Land told me that it's inevitable the shopping golden mile will have to expand east toward Kowloon Park.

One way to fully utilize the ferry terminal's arcade is to improve pedestrian flow to make shoppers feel more comfortable, he said. Vehicular traffic for the pier makes it more complicated to design optimum people flow, but that is only a matter of coordination.

Situated in the middle section of Canton Road, China Hong Kong City is further away from the MTR station than Harbour City.

However it is closer to Austin Road in Jordan, where a high-speed rail station is now under construction.

Pedestrian traffic to this end of Canton Road will also increase when it is linked - possibly by elevated walkways - to t
he West Kowloon Cultural District.

Only a decade or so ago, Haiphong Road was just a side street with few pedestrians.

It started to get busy with the opening of the Gateway, and has now become a prime shopping location.

That is the kind of big break that every landlord dreams of.

Siu Sai-wo is chief editor of Sing Tao Daily

ZARA傳搬出國金 同區租巨舖
2012年04月18日(三)
http://the-sun.on.cc/img/v2/logo_tsn.png

中環巨舖成為國際時裝品牌兵家必爭之地，市傳西班牙時裝品牌ZARA很大機會不續租中環國際金融中心商場的店舖，擬以每月逾千萬元預租同區卡佛大廈一個5層巨舖，至於原租用的面積逾1萬方呎商場舖位，不排除將分間成3、4個舖出租，每個面積約4,000至5,000方呎。

據悉，ZARA租用國際金融中心商場舖位多年作為旗艦店，市傳該品牌擬不續租，轉而以每月逾千萬元預租卡佛大廈地庫至3樓共5層樓面，面積約5.5萬方呎，較現租金高逾一倍。由於洽租國際金融中心商場租戶多，相信發展商考慮待ZARA遷出後，將上址分間出租，吸納更多品牌。

一個意大利時尚品牌擴充旗下尖沙咀海港城店舖樓面，以每方呎近1,000元租用一個面積2,000方呎舖，較前租金高約四倍。另投資者黃海明表示，本年迄今已斥約6億元買舖，料全年投資額約15億元。

中區商廈呎租跌近11%

高緯環球蕭亮輝稱，上季中區商廈實際呎租約105.4元，按季跌近11%，現區內主要甲級商廈騰空樓面逾20萬方呎，料今年該區租金受壓。

利嘉閣黃奇華稱，灣仔鷹君中心中層8室近3,528萬元售出，呎價2.15萬元，創該廈新高。據土地註冊處資料，去年十月以約2.2億元售的上環信德中心東翼高層戶，剛錄得取消交易成交登記，上址呎價近1.7萬元。

Golden Week luster lost to Macau allure
The Standard
Tuesday, April 24, 2012

The upcoming Golden Week holiday in the mainland no longer fills local retailers with cheer, as many cash-rich tourists from across the border now prefer to do their spending in Macau.

Retail operator Lifestyle International Holdings (1212), which runs the two Sogo department stores here, expects only lukewarm sales during next week's May Day holidays amid fears that visitor arrivals from the mainland are unlikely to match last year's numbers.

For Golden Week arrivals last year saw a 21.6 percent from the 2010 level, which itself recorded a sharp 40.3 percent rise, Hong Kong Tourism Board data show.

"We expect sales during [the May] Golden Week not to contribute a lot," Lifestyle chief financial officer Terry Poon Fuk-Chuen said.

Ample Capital analyst Du Yiwen said growth in sportswear sales will likely ease to single digits compared to a rise of up to 30 percent last year, but cosmetics and jewelry may hold steady.

The gambling mecca next door, meanwhile, is benefiting greatly from the shift in focus. Core- Pacific Yamaichi head of research Castor Pang Wai-sun said while Hong Kong hotels still have rooms available for the coming holiday, the ones in Macau are all booked up. "This shows a decline in appetite for visiting Hong Kong. But Macau remains attractive," he said.

Gaming revenue for April is expected to rise 22 percent to 25 billion patacas (HK$24.27 billion) from a year ago, Citigroup said.

Local retail stocks slipped yesterday - Giordano International (0709) dropped 1.1 percent to HK$6.41 and IT (0999) fell 1.4 percent to HK$4.25. Chow Tai Fook Jewellery (1929) closed 0.8 percent down at HK$11.68.

But Macau gaming stocks SJM Holdings (0880), Sands China (1928), Galaxy Entertainment Group (0027) and Melco International (0200) also dropped more than 2 percent.

Pang explained: "Gambling stocks have already fully reflected investor expectations on gaming business growth and the price-to- earnings ratio is too high now [for a `buy']."

Gloomy outlook slows sales
The Standard
Wednesday, July 04, 2012

Growth of local retail sales slowed in May from April as the gloomy economic outlook further hurt consumer sentiment despite an increase in tourist arrivals.

Retail sales rose 8.8 percent by value in May to HK$36 billion from a year ago, easing from April's 11.4 percent gain.

The sales by volume also slowed, gaining 5.8 percent year on year in May compared to 7.6 percent in April.

A government spokesman said the adverse external environment amid the European crisis could weigh on consumer sentiment down the road.

"We need to stay alert to all these developments," he added.

Caroline Mak Sui-king, chairman of the Hong Kong Retail Management Association, said: "Local retail sales have yet to reach bottom."

In May, volume of sales of miscellaneous consumer durable goods increased 52.7 percent, and sales of motor vehicles and parts gained 41 percent.

However, sales volume of furniture and fixtures dropped 6.7 percent from a year ago, and those of food, alcoholic drinks and tobacco fell 4.2 percent.

Also, sales of jewelry, watches and clocks fell 2.9 percent by volume in May, versus a 6.2 percent gain in April.

Sales by value of luxury brands gained only 3.1 percent in May, dwarfed by a 15.1 percent rise in April.

The number of mainland visitors rose 19.4 percent in May year on year to 2.5 million. That eased from a 23.9 percent increase in April.

"Although there was a three- day break in the beginning of May, mainland consumers were reluctant to spend as much as before, as a contracting mainland economy and tight rules on the mainland property market hurt spending sentiment," said Alec So King- pui, an analyst at Grand Alliance Asset Management.

Mak expects jewelry and clock retailers to open new stores at a slower pace in the second half. She estimates retail sales will see only single-digit growth by value in June, but that there will be full-year growth of 12-15 percent.

HK LegCo passes law against unfair trade practices
(Shanghai Daily, July 17)

HONG KONG, July 17 (Xinhua) -- The Trade Descriptions (Unfair Trade Practices) (Amendment) Bill 2012 was passed by the Legislative Council (LegCo) on Tuesday.

The Bill seeks to tackle various common types of unfair practices that may be deployed by rogue traders against consumers.

more: http://www.shanghaidaily.org/article/article_xinhua.asp?id=83544

Brands shop for cheap NT space
The Standard
Thursday, August 09, 2012

Shop rents skyrocketed as many international brands squeezed into prime shopping districts such as Central, Causeway Bay and Tsim Sha Tsui. This has triggered a trend for relocation, with top brands starting to move north in search of cheaper rents and closer proximity to well-heeled mainland customers.

For example, Prince Jewellery & Watch Co is paying monthly rent of HK$2.5 million for a few hundred square feet at its Causeway Bay location on Russell Street, according to market sources.

In comparison, its newly leased 6,000-square-foot premises at Landmark North in Sheung Shui will only cost about HK$1 million per month.

So it is small wonder well-known retailers have been branching out to shopping malls in Tai Po, Yuen Long, Tuen Mun and Sheung Shui.

Kitty Yau Yuen-ling, assistant sales director of the Hong Kong commercial department at Centaline Property Agency, said rents in Central have risen to nearly HK$1,000 psf.

"Some shop owners double rents during contract renewal, which scares a lot of tenants," Yau said. "The market situation in the retail sector has worsened this year, and the consumption demand of individual visit scheme tourists is low. More international brands may choose to relocate their stores rather than renewing their contracts at their current locations."

Swedish apparel chain H&M's flagship store, opened in 2007 on Queen's Road Central, is to be replaced by the Spanish clothing brand Zara.

H&M will close its shop there after the fall next year due to soaring rents. The Wall Street Journal reported that Zara will take over the 30,000-sq-ft space for US$1.4 million (HK$10.92 million) per month - double what H&M now pays.

Meanwhile, various brands have made their way into malls near the border, where facilities such as Tai Po Mega Mall - the area's largest with nearly 600,000 sq ft of retail space - are aggressively changing their tenant mix to attract both local customers and big- spending mainlanders.

French brand agnes b plans to open an agnes b Delices chocolate shop this quarter, followed by a Sport b casualwear outlet at the end of the year.

Bourjois Paris, Crabtree & Evelyn and The Body Shop are among the personal-care product and cosmetic brands in the mall, developed by Sun Hung Kai Properties (0016).

Frequent shopping tours are organized to lure thousands of residents from Shenzhen, Dongguan, and Guangzhou, who are expected to spend HK$4,500 to HK$8,000 per person.

Maureen Fung Sau-yim, Sun Hung Kai Real Estate Agency general manager for leasing, expects pedestrian flow to rise 10 to 15 percent to 77 million at Tai Po Mega Mall, with sales revenue climbing 12 to 15 percent year-on-year to HK$2.6 billion.

"There is great potential for the shopping malls in the New Territories to develop. A larger customer base can be achieved, as the shopping malls improve their tenant mix and increase various tourist-based promotions," Fung said.

At Yuen Long Plaza, another SHKP development, 15 new tenants - including jewelers, audio/visual, and personal-care product retailers - have been signed up this year to tap mainland customers. The mall has even partnered with Kowloon Motor Bus to provide free rides between Yuen Long and Shenzhen for shoppers spending HK$400 or more.

Fung expects pedestrian flow at Yuen Long Plaza to reach 47 million for the whole year, up 10 to 15 percent from last year, with sales revenue jumping 12 to 15 percent to HK$700 million.

At Sino Group's Tuen Mun Town Plaza, H&M, Zara and Lancome have recently opened stores, with Rolex, Tudor, NSK, Estee Lauder and Marks & Spencer following suit later this year.

Tuen Mun Town Plaza has always been well-patronized by mainland customers under the individual visit scheme, as the mall is only a 15-minute drive from Shenzhen Bay Port, said Ronnie Chan Yam-ling, general manager of Sino Property Services.

In the second quarter next year, SHKP will open a new shopping mall atop Tuen Mun West Rail station, named V City.

"Various renowned tenants and brands have signed contracts with us, with 80 percent of the brands making their initial presence in Tuen Mun, such as agnes b and Haagen-Dazs," said Jimmy Wong Chin-wah, executive director of Sun Hung Kai Real Estate Agency.

Landmark North - another SHKP development - recently saw five international watch brands interested in leasing retail space.

"We want to expand our sales network outside Central, Tsim Sha Tsui and Causeway Bay, to make shopping more convenient for mainland customers, who make up 80 percent of all our customers," a Prince spokesman said.

"As a lot of potential customers live in Shenzhen Nanshan district, we will gradually develop our network in the New Territories in the future."

More than 50 global retail brands set up shop in Hong Kong in 2012

More than 50 global retailers opened shops last year to boost brand awareness and provide a stepping stone for expansion to the mainland

South China Morning Post
Wednesday, 08 May, 2013

More international retailers opened shops in Hong Kong than any other city in the Asia-Pacific region last year.

Fifty-one retail brands set up shop in the city, according to a study by CBRE Global Research & Consulting, which monitored more than 300 new retail openings across Asia-Pacific in 2012.

"Hong Kong is a win-win-win destination for retailers, landlords and shoppers," said Joe Lin, executive director of retail services at CBRE Hong Kong. "Global retailers are attracted by Hong Kong's market maturity as they look to create brand awareness to facilitate their long-term expansion into China, while simultaneously benefiting from the significant direct Chinese spending in the city.

"Landlords welcome the influx of overseas brands as they look to bring novelty for shoppers and differentiate their malls and retail outlets," Lin said. "And for shoppers, Hong Kong brings the clear advantage of having no consumption tax, authentic goods, and a world-class shopping experience to suit any taste and budget."

The number of new retail brands to open in Hong Kong was almost double the number of new entrants to second-placed Singapore, which lured 27 new retail entrants last year. Third in the rankings was Tokyo, where 24 new retailers opened stores in the city, followed by Ho Chi Minh City, New Delhi, Beijing and Shenyang.

Of the new brands that came to Hong Kong last year, almost a quarter were luxury and business retailers. Mid-range fashion retailers expanded rapidly as well to account for 21 per cent of all new entries to Hong Kong.

"We saw a number of new leases in the non-top-tier luxury segment last year, with a significant increase in mid-range fashion and accessory retailers," Lin said.

"This suggests that the consumption pattern of mainlanders is beginning to shift from exclusively top-tier luxury products to the more affordable mid-range watches, jewellery, and fashion - highlighting a change in Hong Kong's retail landscape."

Although the retail leasing market would still be supported by robust tourist arrivals, retailers are becoming more cautious about expansion due to high rents and other uncertain market factors. CBRE expects Hong Kong's retail rents to grow by 8 per cent this year, with mid-ranged fashion newcomers to expand their footprints in the city.