After Prada Closes The Biggest Store In Hongkong, Will LV Withdraw?

Russell street, located in Tongluowan, Hongkong, is known as "the most expensive street in the world" with high rent and luxury stores. The street, which is only 250 meters long, is regarded as a barometer of the sale of luxury goods in Hongkong.

But now, some luxury goods are being withdrawn from here. It is reported that following the Prada plan to close the store in Russell street in June this year, the French luxury brand Louis Vuitton (Louis Weedon) also intends to withdraw the flagship store in Times Square on Russell street.

　 Will LV close the flagship store of times square in Hongkong?

It is reported that LV is planning to close the branch because the owner of Kowloon warehouse refuses to reduce the rent for the brand located at the 2 floor of times square, Tongluowan, Hongkong.

Customer service staff at LV Times Square said there was no such news at present, but if the outside situation is more chaotic, there may be some considerations. The shop is still open.

Previously, due to the high rent, Prada plans to close the store in Tongluowan, Hongkong, Plaza 2000 in 2020. This shop is the sixth store opened by Prada in Hongkong, and is also the largest store. Prada has signed a 7 year lease with the property at HK $9 million per month, which expires in June 2020.

It is reported that the LV flagship store on the two floor of times square has an area of about 10 thousand square feet, with a monthly rent of about HK $5 million (about 4 million 460 thousand yuan). Prada has a total floor area of 15 thousand square feet at Plaza 2000, with a monthly rent of HK $9 million (about 8 million 30 thousand RMB).

Plaza 2000 and Times Square are located on Russell street. Since its opening in 1994, Russell street has been the landmark of Hongkong's retail industry. In November 2019, a report by DTZ, a real estate service provider, showed that the rental of Russell street was very expensive. The rent per square foot (about 0.09 square meters) per year was $2745 (about 19 thousand yuan), which was more expensive than the Fifth Avenue in New York. It was the most expensive shopping street in the world.

Prada confirmed that the property of Plaza 2000 announced that it would reduce the rent of 44% for the next tenant, while commercial real estate companies such as Taigu real estate and Hongkong real estate company also proposed a series of measures such as rent reduction and rent relief to help the struggling retail tenants cope with the current crisis.

LVMH Group official website information shows that at present, Louis Vuitton has eight branches in Hongkong, including two branches in Tongluowan, located in Liyuan shopping mall and Times Square. Previously, the group announced plans to open ninth stores in Hong Kong International Airport in 2021.

Influenced by continuous social conflicts, the decline of mainland visitors has led to a sharp decline in the retail industry of luxury goods. According to the twenty-first Century economic report, tourists in Tongluowan can hardly see tourists. Most shopping malls and jewelry stores have few customers. There are at least one vacant berth on each floor in the Times Square Mall, and at least 6 of the 6 floors are vacant. The world trade center, which is about 10 minutes' walk from Times Square, is very serious. There are at least 5 vacant berths on the first floor of the shopping mall. Most of the two floors are for rent, and the vacancy rate exceeds 60%.

　 Latest retail sales in Hongkong fall to freezing point

According to the latest retail sales figures released by the census and Statistics Department of the Hongkong Special Administrative Region in December 2nd, the provisional estimate of the total retail sales value in October this year dropped by 24.3% compared with the same period last year, the largest monthly decline in a single month.

Figures show that the estimated value of total retail sales in Hongkong in October 2019 was HK $30 billion 100 million, down 24.3% from the same month in 2018. The revised estimate of total retail sales value in September 2019 decreased by 18.2% compared with the same month in 2018. Compared with the same period in 2018, the provisional estimate of total retail sales value fell by 9% in the first ten months of 2019.

Among them, sales of jewellery, watches and clocks and precious gifts continued to deteriorate, or nearly 43%. Goods, medicines, cosmetics and clothing in department stores fell by more than 30% respectively. The sales value of electrical appliances and other unclassified durable consumer goods decreased by 16%.

In December 5, 2019, the US jewellery brand Tiffany announced the key financial data for the third quarter of fiscal year 2019. During the quarter, Tiffany's net sales in mainland China achieved double-digit high speed growth, but sales of Tiffany in Hongkong dropped by 49% over the same period due to persistent turbulence in the Chinese region of Hongkong.

According to Bain, luxury goods sales in Hongkong reached a peak of 10 billion euros in 2013, and this figure could fall to 6 billion euros in 2019. This will mean that only 5% of the world's total sales are now close to 2%.

In November 20, 2019, Morgan Stanley lowered the profit forecast and target price of 1997.HK, a retail shopping center, and lowered the target price of Kowloon warehouse from HK $48 to HK $40. As of January 7, 2020, the Kowloon warehouse property price was HK $44.7.