Chow Tai Fook, the world's second-most valuable jewellery chain, is closing 15 of its retail stories in Hong Kong, signalling the grim outlook luxury retailers face in the trouble-hit territory. The violent direction taken by Hong Kong protests and the heightened trade tension owing to the US-China trade have served up a double whammy for the prices of global retailers in Asia's financial capital.
Chow Tai Fook said it was expecting "macro headwinds" in the next six to 12 months in the backdrop of the ongoing anti-China protests. It also cited volatile gold prices and US-China trade tensions as the reasons for the partial retreat, Bloomberg reported on Tuesday.
Not renew leases of the stores from April
The report says the move from Chow Tai Fook is the first major pullback by a large luxury retailer in the self-governed city ever since the protests broke out in April last year. The protests were initially against a controversial law to allow repatriation of accused to foreign territories inclosing mainland China. It then took a clear pro-democracy tone and led to valence that crippled the day-to-day life.
Chow Tai Fook is only behind Tiffany & Co in terms of market value. The luxury retailer has 86 retail outlets in Hong Kong. It said in a statement that it will not renew the leases of the stores starting April 2020.
The stores to be shut are mainly the ones in the tourist districts like Causeway Bay, Mong Kok and Tsim Sha Tsui, Chow Tai Fook said. The jewellery chain saw its same-store sales fall for three consecutive quarters in Hong Kong and Macau, after the protests broke out, hitting tourist arrivals, the report said.
Tourist arrivals dry up, unemployment soars
At the zenith of the anti-government protests, the Hong Kong agitators had targeted businesses in the city. Best Mart 360 was one among them, and said 75 out of its 102 stores were attacked by the anti-government protesters. Hong Kong's Retail Management Association said in December that more than 7,000 retailers would close down, resulting in job losses for 5,600 people, the South China Morning Post reported.
Earlier, fashion retailer Bonjour had said it was staring down a record loss for the year ending December 31, 2019. "The Hong Kong economy saw an abrupt deterioration in the second half of 2019. Consumption and tourism related sectors were hit hard by local social incidents. Moreover, the global economic slowdown and the escalated US-China trade war weighed further on Hong Kong's economic outlook," Bonjour said in the filing with the stock exchange.