Retailing News

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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

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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.

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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.

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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."

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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.

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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.

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


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

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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.

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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
-------------------------------------------

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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.

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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.

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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.

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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."

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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.

[hyacinthus]

Shopping time again!

Originally Posted by hkskyline

...
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

[hkskyline]

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.

[hkskyline]

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.

[hkskyline]

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.

[hkskyline]

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.

[hkskyline]

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.