Record retail slump in Hong Kong
Political and social unrest in Hong Kong has begun to have a serious impact on the city’s economy, and affect its status as shopping hub and a home of luxury brands.
Hong Kong retail sales fell 23 per cent in August from a year earlier – the biggest decline on record – while the value of sales of jewellery, watches and other valuable items decreased by 47.4 per cent.
Overall visitor arrivals dropped 39 per cent, with the number of mainland tourists to Hong Kong falling 42.3 per cent.
After the pro-democracy demonstrations started in June, the impact on second-quarter results was muted, but that is expected to change in third-quarter results as brands from Hermès to Tiffany to Cartier grapple with store closures. Sales declines of between 30 and 60 per cent are expected.
As the protests drag on and tourists and shoppers stay at home, retailers are having staff take unpaid leave, with some reportedly planning layoffs. Meanwhile, Bloomberg reports, some landlords are slashing rents.
JD Sports acquisition under scrutiny
Britain’s competition watchdog, the Competition and Markets Authority (CMA), says JD Sports Fashion’s acquisition of smaller rival Footasylum failed to address its concerns that the takeover could be bad for shoppers. It has referred the deal to an in-depth investigation.
In a company statement, Britains’ biggest sportswear retailer has denied that there is a problem, saying, “JD’s rationale for carrying out this acquisition was to retain Footasylum’s position as a multichannel retailer … while ensuring that Footasylum’s diverse and complementary offer remains available to its consumers”.
It also denied that there would be any price increases or a reduction in product ranges or service quality.
JD operates more than 2400 stores, now including 70 Footasylums in the UK. It acquired Footasylum in March for £90 million ($165 million).
Forever 21 files for bankruptcy
US fashion brand Forever 21 has filed for Chapter 11 bankruptcy protection and is to close 178 locations across the US, as well as most of its stores across Asia and Europe, in an effort to return to profitability.
According to The Washington Post, the retailer will close 350 stores across 40 countries.
Forever 21 entered Australia in 2014, but by 2017, it had closed all three of its local stores and exited the market.
GlobalData Retail managing director Neil Saunders told Inside Retail that the bankruptcy would result in a much leaner business that would be more focused on key stores in core markets and online sales.
“The international operations will be much more significantly disrupted with most, if not all, stores in Europe expected to close,” Sanders said.
“In our opinion this is for the best, as Forever 21 was a weak player in a very competitive and sophisticated European apparel market; and it never really fully understood customer demand in the region.”
John Lewis slashes senior management
Britain’s John Lewis Partnership plans to run its department stores and its Waitrose upmarket supermarket chain as a single business, a move that will cut a third of its senior management roles.
The UK’s largest employee-owned business says the creation of cross-partnership roles and the greater integration of the two brands would see 75 of 225 senior management head office positions removed, meaning there will no longer be separate bosses for the two divisions.
The plan will lead to an overall cost saving of about £100 million ($183.33 million) over time, Reuters reports. In March, the group reported a 45 per cent fall in 2018-19 profit.
Steinhoff again delays results
Steinhoff Investment Holdings, a subsidiary of the crisis-hit South African retailer Steinhoff International, has announced that its annual results will be delayed again.
In a statement, the company said that despite its “best efforts, there remains a substantial amount of work in order to prepare, and then to audit, the company’s annual financial statements. These tasks remain complex and uncertain.”
The retailer Steinhoff International, which reported billions of dollars in losses following an accounting fraud worth an estimated US$7 billion ($10.4 billion), delayed the publication of its 2017 and 2018 results after flagging holes in its accounts in December 2017.
While the retailer has since published both, Steinhoff Investments has not. It said in June that it would publish them before the end of September 2019. It now says the results will be released “in due course”.