Aug 31, 2015
HK retail sales fall for fifth month as tourism slows, stocks slump
Aug 31, 2015
Hong Kong retail sales fell for the fifth straight month in July, as a slowdown in tourist arrivals further battered sales of big-ticket items such as jewellery and watches, while a plunge in the stock market hurt consumer sentiment.
July retail sales fell 2.8 percent in value terms from a year earlier, to HK$37.6 billion ($4.85 billion), versus a revised decline of 0.4 percent in June.
In volume terms, sales rose 1.9 percent in July, down from June's revised growth of 4.3 percent.
The city's retailers have been hammered by slowing mainland tourist arrivals and high rent and labour costs, with the weak sentiment expected to persist for the rest of the year.
The number of visitors to Hong Kong fell 8.4 percent in July, from growth of 11.2 percent a year earlier, Hong Kong Tourism Board data showed on Monday. The number of mainland Chinese tourists alone slid 9.8 percent in July, versus growth of 12.8 percent a year earlier.
"The near-term performance of retail sales will continue to hinge on inbound tourism growth and on whether there would be any negative spillover from the increased stock market volatility," the government said.
May retail sales fell 0.1 percent in value terms, after April's drop of 2.1 percent and a March slide of 2.9 percent.
The blue-chip Hang Seng index lost 12 percent in July, its fourth straight month of decline and the worst performance since September 2011.
For the first seven months, retail sales fell 1.8 percent in value terms on the year, though volumes were up 1.7 percent.
In July, sales of jewellery and watches fell 5 percent by value, versus a 10.4 percent fall in June, the government said. Medicines and cosmetics dived 5.4 percent and apparel plunged 13 percent.
Prada SpA said its sales for the six months ended in July were affected by "continuing weakness of important markets like Hong Kong and Macau".
Last week, luxury retailer Emperor Watch posted its first half-yearly loss since listing in 2008, hit by a strong Hong Kong dollar and weak tourism.
Tracking global rivals Burberry, Kering and LVMH, Emperor Watch said it would renegotiate rents and trim its network.
"We expect more store closures in Hong Kong, even though it has been reported that rentals in prime districts have fallen strongly by 30 percent from their peak," UBS analyst Spencer Leung wrote in a research note on Aug 20.
Rentals of ground-level shops in prime areas will have to drop 70 percent from their peak for non-jewellery retailers to cover expenses, UBS added.
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