Prestige brands threaten to close Hong Kong stores amid high rents and falling sales
Global luxury goods firms say combination of soaring rental costs and continuing decline in customers from mainland could force them out
Hong Kong's retail leasing market is in its biggest state of turmoil for a decade - with even global brands warning landlords they will close their stores if rents continue to soar amid falling sales.
As more tourists omit Hong Kong from their shopping itineraries, Helen Mak, senior director at commercial real estate company Colliers International, said: "Luxury retailers are braced for tougher sales, and the industry problem has been compounded by the sharp fall in the [buying power of] the euro and yen."
Swiss watchmaker TAG Heuer is closing a store in Causeway Bay's prestigious Russell Street as high rents and declining customers weigh on profitability, according to the head of LVMH Moet Hennessy Louis Vuitton SE's watchmaking activities.
"Traffic has diminished and rents have stayed high," Jean-Claude Biver told Bloomberg.
Meanwhile, luxury goods holding company Kering - which owns the Gucci brand - has said it is seeking to negotiate lower store rents as business in Hong Kong, Macau and the mainland continues to slow amid Beijing's crackdown on corruption and an economic slowdown.
Kering chief financial officer Jean-Marc Duplaix said that if rents did not come down, some shops in the region might close.
Burberry Group said it might also try to lower its rent bill after sales growth slowed to a two-year low, adding that Hong Kong was "a challenging luxury market".
