Hongkong Central Shopping Center To Withdraw Funds To Reduce Adidas Rent

According to the information of the Hongkong land registry, the 13000 square feet of Queen's Road 36, Central Plaza, Coach, Inc. (NYSE: COH), which has been leased out by the US leather brand, has already been found in the 13000 square feet of Central Plaza, 1200 square meters. The German sports brand Adidas, Adidas will become the new tenant of the shop, and Coach is officially completed in August 30th.

As of the four quarter of June 27, 2015, Coach, Inc., Hongkong's sales in the same store fell sharply, dragging down the first time the same store sales in the Greater China market fell, and the double-digit increase in the mainland market failed to offset the huge decline in the Hongkong market, while the mainland market store was the 22 one in Hongkong.

About 6 times.

Current Adidas

The largest flagship store in Hongkong is the flagship store of about 18000 square feet in Hankou Road, Tsim Sha Tsui, and Queen's road central store will become the second flagship store in Hongkong and the largest flagship store in Hong Kong Island.

The rent of the new lease is estimated at HK $4 million 340 thousand, which is 40 less than the previous rent of HK $7 million 200 thousand for Coach, and the decrease in rents is also in line with the decline in the general rent of retail real estate owners in Hongkong's core business area, which is more than 30%.

In August, Coach decided to announce that the rental of new tenants would be reduced by 45% by the time of the termination of the shop in advance. However, the new tenant reportedly was Swatch Group SA (UHR.VX), Swatch group's new jewellery brand Harry Winston, and the Ming Pao reported at the end of August that the HW could lease the property of the company in HK $4 million.

Coach, Inc.

In 2008, it began to lease the property of Queen's Road Central. The rent was only HK $2 million 600 thousand at the time, and the lease was four years. In 2012, the brand was renewed for 5 years, the rent was HK $5 million 600 thousand, plus the external wall advertising rent of HK $1 million 600 thousand, a total of HK $7 million 200 thousand, a sharp increase of 1.8 times, almost three times the price.

In the past two years, Hongkong's retail market, especially the high-end market, is extremely weak, which makes the global luxury market feel helpless. Many brands are unable to make ends meet.

Despite the fact that Coach, Inc. said that the early closing of stores is the reason for optimizing the Hongkong store strategy, the industry has pointed out that the sluggish sales and high rents are the real reasons. The Hongkong media said that regardless of any material, labor costs and marketing costs, the store had to sell 50 handbags priced at HK $5000 per day, just to offset the rental cost.

Also in May this year, the company also closed the store in the core area of Admiralty Pacific square, but the company has renovating flagship stores in Guangdong.

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