Chow Tai Fook, Sa Sa to shut protest-hit stores in signs Hong Kong’s retail slump to persist in 2020

Chow Tai Fook Jewellery Group and Sa Sa International are planning to shut about one-fifth of their stores in protest-hit Hong Kong in the coming months and focus on growing their presence in the mainland China market, suggesting a slump in local retail sales is not about the reverse soon.

The world’s second-largest jewellery chain by market value has leases on more than 40 of its stores in Hong Kong expiring between April 2020 and March 2021, a spokesperson said in an email late Tuesday. The plan is not to renew as many as 15 of them in tourist districts such as Causeway Bay, Mong Kok and Tsim Sha Tsui, citing “macro headwinds” as a reason.

Sa Sa, Hong Kong’s largest cosmetics chain operator, plans to shutter 20 to 25 per cent of its stores in the next 18 months with most of the affected outlets in tourists areas, according to a statement accompanying its business update on Wednesday. The cosmetic chain operator saw a 35.2 per cent slide in sales in Hong Kong and Macau in the quarter ended December 31 from a year earlier.

The decision underscores the grim outlook for Hong Kong’s retail industry, even as seven months of anti-government protests have subsided in recent weeks. Retail sales slumped 23.6 per cent November, following a record 24.4 per cent fall in October, while the economy slipped into a technical recession in the third quarter.

Hardest-hit goods were luxury items such as jewellery and watches, with a staggering 43.5 per cent drop, according to government data.

“The decision is 100 per cent related to the anti-government protests that have discouraged mainland tourists from coming to shop in Hong Kong,” said Louis Tse Ming-kwong, managing director of VC Asset Management. “This is another damning verdict on Hong Kong’s retail business outlook. Hong Kong retailers going northbound in their expansion will become a trend.”