Fashion chain store Bauhaus International is planning to close 10 more outlets in Hong Kong this year.
Co-founder and chairman Wong Yui-lam says the company closed six stores in Hong Kong last month, and admits layoffs are likely.
Bauhaus designs and makes apparel and accessories which it wholesales and retails under its brand names including Bauhaus, Salad and Tough, as well as third-party labels, including Superdry. In a statement earlier this month, it said same-store sales in Hong Kong and Macau for the quarter ended March 31 dropped 14 per cent year-on-year.
For the year ended March 31, same-store sales for its 86 outlets in the two territories dropped 9 per cent.
Wong says Bauhaus has about 80 stores in Hong Kong, where the business environment is “very challenging”.
“Costs haven’t dropped while sales have declined significantly.”
Expecting the situation to worsen before long, he says that not only will underperforming or loss-making stores be closed, but also outlets that are “making a little money”.
Bauhaus stores are mainly in shopping malls, where the rental level is still high, and Wong says he doesn’t think the group can afford to maintain its business scale at current rental levels.
He says Bauhaus is also under pressure to lower selling prices amid an inventory glut.