Hongkong'S Retail Industry Suffers From "Hong Kong Embarrassing" Performance

In November 30th, the census and Statistics Department of the Hongkong SAR government released the latest retail trade data: in October, the total retail sales value of Hongkong was temporarily estimated at HK $37 billion 200 million, down 3% from the same period last year.

After revised estimates, the value of total retail sales in September dropped by 6.3% over the same period last year.

The total retail sales value of the total retail sales in the first 10 months of this year dropped by 2.7% over the same period last year.

This is the eighth consecutive month since this year.

Fall.

Data also showed that in October, the number of visitors to Hong Kong fell by 2.7%, down 5 consecutive months.

A spokesman for the Hongkong Special Administrative Region government said that the outlook for retail business will continue to be constrained by the downturn in the tourism industry of Hong Kong.

Industry analysis, in the face of other tourism destinations and cross-border electricity supplier competition, Hongkong retail industry urgently need to deal with, otherwise it will continue to experience the cold winter of retail business.

However, the Hongkong Federation of trade unions (hereinafter referred to as the "Hong Kong Industrial Alliance") does not think so.

In November 29th, the Hong Kong industrial alliance held a press conference that Hongkong's retail industry performance downturn was a "false impression". It was caused by the explosive growth of jewelry, watch and other industries. If the category is deleted, Hongkong's retail market will not be much worse.

Performance is worrying

Recently, Sasa, Zhou Dafu and Lufu jewelry have recently released interim results.

In November 26th, the interim results of the six fortune jewellery show that the company's medium-term earnings plunged 42.4% to HK $463 million 400 thousand, and revenue fell by 7.7% to HK $6 billion 965 million.

Among them, the same store sales fell 11.6%.

By the end of September 30th, in the first half of the fiscal year, Hongkong's market income of Lufu jewelry fell 6.3% to HK $4 billion 204 million 800 thousand, still the main source of income of the group, accounting for 60.4%. The mainland market revenue fell 6.1% to HK $1 billion 770 million 600 thousand, accounting for 25.4%. Macao's market performance was the worst, and revenue plunged 29.2% to HK $920 million 100 thousand, accounting for 13.2%.

For the coming Christmas and New Year holiday season, Huang Weichang, the chief executive of six Fu, said the continuing fall in the visitors to the mainland still has an impact, but the company has several promotional activities in the Christmas season and three to half off promotions to stimulate sales.

Therefore, this holiday season is expected to decline almost the same as in the first half of the year.

The two competitors of Liu Fu

Sasa and medium-term results were also unsatisfactory, which fell by 42.2% and 55% respectively.

President Sasa and chief executive officer Guo Shaoming pointed out at the previous press conference that the decline in the number of visitors to the mainland hit the group business. In the third quarter, the turnover dropped by 13% to 14% in the first half of the year, of which 95% fell from Tsim Sha Tsui, Tongluowan and Mong Kok branches.

Guo Shaoming said that in the past 3 months, there were nearly 10 households.

Earnings warnings are expected to fall by about 50%.

He admitted that the situation of Hongkong's retail industry is very grim. In addition to affecting the group's revenue, the company's front-line staff revenue also fell by 15% to 20%, but there was no layoffs.

Investment banks watch and decline

To add insult to injury, investment banks also collectively "watch and fade" retail Hong Kong stocks.

On the day of the Hongkong retail sales data released in October, the Bank of America, Merrill Lynch released a report that the Samsonite rating of luggage retailers was reduced from "buying" to "neutral", and the target price was reduced from HK $29.5 to HK $25 / share.

In the report, Bank of America Merrill Lynch said the global worries about travel safety will affect the sale of suitcases in the fourth quarter of this year and the first quarter of next year.

In addition, the attractiveness of Samsonite's valuation has declined, and the current P / E ratio is 19 times, close to the historical average.

At the same time, CLSA, JP Morgan, HSBC, Goldman Sachs and Paris Bank of France coincidentally lowered the target price of Zhou Dafu.

In its November 23rd report, the Bank of Paris said that Zhou Dafu was still in the most difficult period and would speed up closing the poor profitable shops. This year, the shop opening plan was difficult to meet the target. The rating was lowered from "buy" to "reduction", and the target price was reduced from HK $10.35 to HK $5.1.

CLSA even gave Zhou Dafu a "sell" rating with a target price of HK $5.7.

In a report released in November 25th, JP Morgan expects Zhou Dafu to remain weak in the same store sales in the second half of the year, mainly due to continued decline in store traffic and difficulties in promoting high priced goods under the economic slowdown.

In view of the weak performance of the company as of the end of September, the 26% and 19% profit forecasts for the 2016 and 2017 fiscal year were cut down, and the target price was lowered from HK $7.4 to HK $6.

Sasa international is also seen by many investment banks. The negative evaluation is mainly from Credit Suisse, JP Morgan and Goldman Sachs.

In November 25th, the Credit Suisse report pointed out that Sasa's interim results were in line with the earnings warning warning issued earlier, mainly due to the decrease in free travel and the narrowing of gross margins.

Based on this, we lowered the forecast of earnings per share for 2016-2018 years in 2%-5%, and the target price was reduced from HK $1.8 to HK $1.75.

In addition to the above companies, the Hong Kong stock market that was lowered by the investment bank in November also included the six blessing group, Zhou Shengsheng, Hendry, Parkson group, L'OCCITANE and so on.

There is no doubt that the weak retail market in Hongkong has begun to be viewed cautiously by the capital market.

In November 30th, a spokesman for the Hongkong Special Administrative Region government pointed out that the prospects for retail business will continue to be hamper by the poor performance of the inbound tourism industry, and the potential impact of the global economic downturn on the consumption intentions of Hongkong locals should also be concerned.

Structural adjustment

The recession has also affected income.

A Hongkong human resources survey shows that the sales of luxury first-line salesmen have significantly shrunk or even more than half. Many retailers also encourage employees to ask for off-season leave, shorten work hours and freeze part-time recruitment.

However, for the retail enterprises in the "cold window period", some people do not buy it.

The Hong Kong industrial alliance not only ignores the poor cry of merchants, but also calls for a pay increase for employees.

In their view, Hongkong's current retail weakness is only due to the excessive expansion of the bitter fruit that the retail market has been pursuing for short-term benefits.

In the long run, it is the only way to adjust the retail structure.

Some economists also support their view that the current retail market in Hongkong will not have any impact on the long-term GDP and employment market.

The data also seem to support their claims.

In the first three quarters of September, the value of total retail sales in Hongkong had dropped by 2.7%. Among them, jewelry, watches and watches and gifts were the worst, with double-digit declines, while department stores, clothing and other categories also performed poorly.

But the above category mainly depends on tourists consumption, especially the mainland tourists.

In contrast, the categories of food and durable goods, which are mainly consumed by local citizens in Hongkong, have actually increased.

Chen Jinping, director of Research Department of Hongkong, Macao and Taiwan, predicts that in the next 5 years, the demand leadership of Hongkong's retail industry will shift from the former high-end consumer goods to the mid-range market brand. The share of local residents' consumption in the retail market will rise again, and the retail industry's dependence on the consumption of mainland tourists will also decrease.

The Hong Kong Industrial Alliance also cited the 4.3% increase in private consumption in the third quarter of the Hongkong market to refute the weakness of the retail market. It is said that if employers lower the wages of workers on the pretext of poor retail market, it will further blow up the retail market in Hongkong, because lowering wages will weaken the consumption power of Hongkong residents and affect the fundamental economic structure.

The organization said that the real wage level of Hongkong workers has not increased significantly since 1999, with an average annual growth of only 1.2%, far less than 4.2% in 1974 -1982. The bottom workers could not share the prosperity of Hongkong in the past 10 years, so they hope to raise 6% next year.

However, the Hong Kong Industrial Alliance's initiative and appeal did not receive a positive response from retailers.