Fashion
Chow Tai Fook Jewellery Group has revealed plans to shut about one in five of its Hong Kong stores, the majority of them in prime tourist areas.
The closures will take effect when leases come up for renewal throughout this year, starting from April according to an emailed statement cited by Bloomberg.
The move follows announcements by Prada and Louis Vuitton they will not renew their leases on stores in Russell Street and Times Square, respectively. Sasa International has previously said it would close up to 30 stores in Hong Kong.
The network retrenchments follow rapidly declining retail sales in Hong Kong since June last year, especially in the luxury sector, due to ongoing demonstrations and protests in the streets which have spooked foreign visitors, and declining visitor numbers from tier-1 cities in Mainland China. Jewelers have been hit by volatile gold prices as well, sparked by geopolitical tensions and the Sino-US trade war.
Chow Tai Fook has not specified exactly how many stores it will close, referring to “in the mid-teens” when asked.
The stores are primarily located in areas popular with tourists, including Tsim Sha Tsui, Mongkok and Causeway Bay.
Chow Tai Fook believes a trimmer store network will reduce overheads and improve margins after it experienced three consecutive quarters of declining same-store sales. In the three months to December 31, same-store sales fell 35 percent in value in Hong Kong and Macau and by 47 percent in volume.
However on the mainland, sales rose 17 percent during the quarter, driven by the rapid expansion of the brand’s store network there; it added a net 279 stores. Same-store sales on the mainland rose by 2 percent.
