Coach Resolutely Closes The Flagship Store In Hongkong

In the eyes of the financial officers of major brands, rent has become an important goal of saving money.

Reuters reported in early August that Tag Heure, the watch brand of LVMH, intends to close its direct store in Hongkong because of its high rental and poor sales.

When the first quarter conference call was held in July 15th, Burberry also mentioned that it would negotiate with owners of shops in Hongkong to reduce rent and intensify efforts to attract local consumers.

"The downward pressure on China's luxury market still exists."

Coach chief executive Victor Luis8 admitted to investors on the 4 quarter of fourth financial report: "similar to other brands in the past year, China's performance is capricious.

Hong Kong and Macao are still affected by the sharp drop in the number of tourists.

At the end of last year, investment bank, UBS, which predicted that retail sales and rents would drop significantly, reported that the proportion of mainland and local passengers has changed from 8 to 2.

Although the local passenger flow has picked up slightly, it is not enough to offset the reduction of mainland tourists. The Mong Kok area is obviously weaker than before. It is expected that the recent weakness of the renminbi will further hurt the desire of mainland tourists to come to Hong Kong.

Hongkong's luxury market has not been performing well for two days, and the content of the big money has never been able to get around this topic until last year.

The nearest luxury brand is Coach.

It is reported that Coach will close its flagship store in Hongkong in 3 days, that is, August 31st, more than two years ahead of the lease deadline.

It has been 7 years since the opening of the 4 storey building of Queen's road in central.

Market participants told the Hongkong Ming Pao that the rent in the first 5 years was 2 million 600 thousand Hong Kong dollars / month (about 2 million 144 thousand yuan). Since 2012, the flagship store's monthly rent plus external wall advertising has soared to 7 million 200 thousand Hong Kong dollars (about 5 million 938 thousand yuan).

Even if rent becomes 2.5 times, it is still calm and clear. It can be seen that Coach is at its peak in Hongkong market in recent years.

However, in today's depressed environment, the expensive flagship store is obviously a burden.

According to the monthly rental cost, the early rent refund can at least be 180 million Hong Kong dollars (about 150 million yuan) for Coach Province, but it is essential for breach of contract.

After the flagship store was closed, the number of Coach stores in Hongkong dropped to 21.

The company said in a statement: "we still regard the Hongkong market as an important market for brand development in Greater China.

As part of the pformation, we are upgrading and upgrading some shops in Hongkong. "

In August 17th, Coach opened again after the renovation of Guangdong road.

So far, 150 Coach stores in the world have been renovated, which is only part of the pformation plan.

In order to solve the problem of the decline of brand image caused by the opening of too many discount stores and the introduction of Logo, Coach formally announced the pformation plan in June 2014. Last August, the creative director Stuart Vevers from the Spanish luxury leather brand Loewe jumped to shoulder the important task of changing the brand image of Coach.

But at least from the earnings figures,

Not yet effective, and there is a tendency to go from bad to worse.

In the first quarter of September 27th, the group's net profit was $119 million 100 thousand, a sharp decrease of 45.3% compared with $217 million 900 thousand a year ago.

In the next 3 months, Coach net profit fell 53.8% from 190 million 700 thousand yuan (about 1 billion 217 million yuan) to 88 million 100 thousand U.S. dollars (about 560 million yuan).

In the first 4 months of 2015, there were 69 households in the world.

Shop closed.

At the same time, whether in self run stores or department stores, the US brand significantly reduced sales promotions, thus resulting in the loss of large numbers of passengers.

Direct sales fell 23% year-on-year, while department store sales fell 30% year-on-year.

Brand CEO

In the telephone interview, they insisted that the latest quarterly performance, including a 24% collapse in the North American market, was "in our expectation" and said it would not change the original pformation plan.

But we still can't see any improvement in the first quarter.

Coach profits continued to decline, down 84.4% compared to the same period last year. This is a takeover in May this year, Stuart Weitzman has brought a wave of profit growth to the company.