Luxury international retail group Kering says it expects to be paying less rent in Hong Kong by the end of the year.
Kering is the owner of a raft of luxury fashion brands, including Yves Saint Laurent, Bottega Veneta and Gucci, the latter of which comprises a third of its turnover.
Kering says its global sales rose 22 per cent in the second quarter of this year, aided by a weakened euro and growing numbers of Asian shoppers in Europe. Sales reached €2.86 billion (US$3.18 billion). Excluding the impact of exchange rates, real organic growth was 7.7 per cent.
CFO Jean-Marc Duplaix said a significant fall in sales in Hong Kong has given the company leverage in renegotiating rental terms with its landlords in the territory.
He told an analysts’ call to discuss second half year sales that he “expects to pay less rent” by the end of the year.
Duplaix described the retail climate in Mainland China and Hong Kong as “difficult” but said despite weakened sales it has no plans to close any of its 70 company owned stores there.
The reality for Kering is that Chinese are still buying its luxury goods – they’re just shopping elsewhere instead of making short retail therapy sojourns to Hong Kong. The number of Chinese visitors to European stores rose nearly 30 per cent year on year and by a similar ratio in Japan.
“All luxury brands, including Gucci, have benefited from the shift of Chinese tourists to Japan and Europe,” said Duplaix in the conference call.
For the first six months of the current financial year, Kering’s profit fell 13 per cent to €489 million.