Hong Kong retail sales fall for fourth month as tourism slows

Hong Kong retail sales fell for the fourth straight month in June as a drop in tourist arrivals continued to hit sales of big-ticket items such as jewellery and watches.

Retail sale slipped 0.4 per cent from a year earlier in value terms to HK$37 billion ($4.8 billion) in June. That followed a revised 0.1 per cent decline in May, 2.1 per cent drop in April and 2.9 per cent slide in March. In volume terms, sales rose 4.4 per cent in June, against revised growth of 4.7 per cent in May.

The city’s retailers have been hammered by slowing mainland tourist arrivals and high operating costs in rent and labour.

“The near-term performance of retail sales is still subject to uncertainties, depending on inbound tourism growth and any spillover to consumption sentiment from the recent stock market volatility,” the government said in a statement.

For the first six months, the value of retail sales fell 1.6 per cent from a year earlier, while volume was up 1.7 per cent.

China’s slowing economy and volatile stock markets have hit retail spending and tourism.

The Hong Kong Retail Management Association said the majority of its members forecast that the declining trend in retail sales will continue in the third quarter with no particularly favourable factors in sight.

Visitor numbers to Hong Kong fell 2.9 per cent in June on the year, compared with year-earlier growth of 6.9 per cent, Hong Kong Tourism Board data showed. Mainland tourist numbers in June slid 1.8 per cent, against 7.8 per cent growth a year earlier.

In June, sales of jewellery and watches fell 10.4 per cent by value, compared to a 14.9 per cent fall in May. Medicines and cosmetics declined 4.2 per cent, against 1.9 per cent fall in May.

Last week, luxury retailer Emperor Watch warned of turning in a loss for the first half as foot traffic dropped due to a strong Hong Kong dollar and unfavourable tourism environment after protracted political unrest last year.

The world’s biggest jewellery retailer Chow Tai Fook Jewellery saw its retail sales fall in the April-to-June quarter, while cosmetic chain Sa Sa saw a dip in its turnover for the quarter ended June. .

Like rivals Burberry and Gucci’s parent Kering , the world’s No.1 luxury goods group LVMH said it was in talks with mall owners in Hong Kong to renegotiate prices amid falling sales.