Circle K Hong Kong sales defy downturn

Circle K Hong Kong sales rose 4.7 per cent in the first half of this year, defying the retail downturn.

Parent Convenience Retail Asia has reported an overall turnover boost of 3.4 per cent to HK$2.339 billion. Same-store sales grew 5.2 per cent year on year in the six months to June 30.

Turnover in the company’s Saint Honore bakery business decreased slightly, by 0.5 per cent to $496 million, with low-single-digit growth in comparable store sales in Hong Kong.

Convenience Retail Asia has 324 Circle K stores in Hong Kong, 118 in Macau, Zhuhai and Guangzhou; and 94 Saint Honore stores in Hong Kong and 50 in Macau, Shenzhen and Guangzhou.  In the first half of this year, it opened six new Circle K stores in Hong Kong and closed 10 for a net decrease of four, and it opened seven new Saint Honore stores in Hong Kong and closed two for a net increase of five.

The group’s net profit increased 68.4 per cent to HK$52 million for the six months, primarily due to the disposal of Circle K business in Guangzhou last year..

“Despite weak retail market sentiment, convenience store and bakery operations achieved

satisfactory comparable store sales growth in Hong Kong,” the company said in a stock exchange filing. “Core operating profit increased 7% on back of stabilised operating costs and improvement in Saint Honore operations.”

With the stabilisation of the commercial property rental market, store expansion has become a key growth strategy for the Saint Honore chain.

Convenience Retail Asia says during the second half of 2016, it will seek to grow profit at existing stores “by continuing to improve efficiency, reduce costs, and drive sales through innovative product development, marketing and category management”.

“With the commercial rental market on the downswing, cautious store expansion will play a role in driving revenue across the convenience store and bakery businesses.

“Although the business environment has been challenging, the group’s core operations remain

strong and healthy, and it has a solid balance sheet with a good cash position. We will continue to monitor the market closely for merger and acquisition opportunities that can help us grow our business, at the same time as we strive for healthy organic growth.”