Swatch accelerates Hong Kong wind down

Business | Stella Zhai and Eurus Yiu 15 Jul 2020

Swatch Group yesterday said it has accelerated plans to shut stores definitively in Hong Kong as well as shops that sell its colorful namesake brand and Calvin Klein, as Chow Tai Fook Jewellery (1929) reported a 73 percent year-on-year plunge in same-store sales in the quarter ending in June.

The world's biggest watchmaker - which owns brands across all price levels, from Breguet, Blancpain, Tissot, Omega and Longines to Swatch and CK timepieces - announced it has cut a record 2,400 jobs and closed 260 stores since December.

It currently operates around 1,800 stores globally.

The news came after Swatch reported a net operating loss of 327 million Swiss francs (HK$2.7 billion) during the first half of this year, with sales over the past six months plunging 43 percent from a year ago.

Chief executive Nick Hayek said that many of the closures were related to the decision to end a 22-year contract to sell Calvin Klein watches.

He said that while the group had maintained operating profits in June, there was nearly no sales in Hong Kong currently.

Meanwhile, Chow Tai Fook said its retail sales value during the quarter ended June shrank by 20.2 percent from a year ago, with that from Hong Kong, Macau and other markets, which accounted for 11.4 percent of the total, plunging 69 percent year-on-year.

Retail sales value from the mainland China market went up by only 0.1 percent from a year ago, said the company. The same-store sales decline in the mainland narrowed to 11.2 percent year-on-year last month as business resumed. The jeweler recorded a net closure of three stores in Hong Kong during the quarter.

In other news, property consultant Colliers International forecast shop rents for tier-one streets in Hong Kong would slump 33 percent this year, dragged down by the pandemic.

The tier-one shop rents have overall dropped by 9.3 percent quarter-on-quarter for the three months ended June, with those in Central sliding 14 percent, it said.

It also predicted that Hong Kong grade-A office rents could drop 14.2 percent in 2020, with an 18 percent slid in core business districts including Central and Admiralty. The vacancy rate for grade-A offices rose by 0.8 percentage points to 8.1 during the second quarter this year as multinational corporations, trading firms, and co-working operators opt to downsize - with the rate expected to further rise to 9 percent as of the year-end.

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