Lifestyle plans third SOGO storeBusiness | Dominique Nguy 16 Aug 2016
Lifestyle International (1212) non- executive chairman Thomas Lau Luen- hung said the company is looking to open a third SOGO department store in Hong Kong and expects the investment to be no less than HK$5 billion.
There are so far two SOGO branches in Hong Kong, one in Causeway Bay and one in Tsim Sha Tsui, Lau said.
While the Tsim Sha Tsui branch focuses on selling cosmetics, Lau believes there is a market demand in Kowloon for a department store similar to the one in Causeway Bay.
Lau said the company is still looking for a suitable location for the new store and that they would be more interested in opening and developing it through bidding for commercial sites rather than renting space from other companies.
Lau said they have bid for commercial sites in the past without success but will continue to be involved as the government launches more commercial sites. He also did not rule out the possibility of partnering with other companies to develop the new store.
He said the company is holding more than HK$6 billion in cash and has an investment portfolio of more than HK$4 billion which he said can be cashed in within 48 hours as the portfolio is comprised of mostly investments of high liquidity such as blue-chip stocks.
Lifestyle International recorded a decline in net profit of 49.9 percent for the six months ended June 30 to HK$587 million compared to the same period last year, which the company said was attributable to the significant decline in investment income.
Taking out the effect of net investment loss, the drop in net profit would be narrowed to 9.1 percent.
The company proposed an interim dividend of 28.9 HK cents per share.
Lifestyle's landmark department store SOGO Causeway Bay's same- store sales recorded a negative growth of 9.5 percent in the first half of this year compared to the same period last year as a result of weak local consumption, increased outbound travel and lower inbound tourists.
Meanwhile, its Tsim Sha Tsui store recorded a 11.3 percent growth in same- store sales.
Lau said the retail market was the worst in January and February and the decline bottomed out and remained flat during May and June.
He does not expect there will be a rebound in retail market in the short term and retail sales will mostly likely remain flat in July and August.
Lau said the fourth quarter will be an important indicator of the performance this year.
Meanwhile, spinoff Lifestyle China (2136) recorded a decline in net profit of 6 percent to HK$157.4 million in the six months ended June 30.
Lifestyle Properties Development (2183) recorded a drop in net profit of 67.9 percent to HK$148.6 million.