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‘Stable’ year for Circle K Hong Kong parent

Despite a weak market, Circle K Hong Kong parent Convenience Retail Asia’s convenience store and bakery businesses have been stable for the year to December 31, with satisfactory same-store sales growth.

The group’s core operating profit increased by 4.7 per cent to HK$170 million (US$21.8 million), which it attributes mainly to effective marketing campaigns by Circle K and improved performance by bakery chain Saint Honore.

Net profit dropped by 12.3 per cent to HK$140 million because of the disposal of its Guangzhou convenience store business in 2015, giving a one-off gain of HK$25 million.

Together with its subsidiaries, Convenience Retail Asia achieved turnover of HK$4871 million during the year. Sales grew by about 3 per cent, mainly driven by solid comparable store sales growth.

With signs of rental adjustments in the commercial property market, the group intends to resume expanding its store network in the coming year but with caution because of macroeconomic uncertainties.

Convenience Retail Asia ended the year with 587 stores, 139 of which were Saint Honore Cake Shops. These comprised 89 in Hong Kong, nine in Macau, 39 in Guangzhou and two in Shenzhen.

The group had 448 Circle K stores – 331 in Hong Kong, and 117 franchises comprising 71 in Guangzhou, 30 in Macau and 16 in Zhuhai.

Local demand

In Hong Kong, when tourism from Mainland China dropped by 6.7 per cent last year, the group saw its retail sales drop 7.1 per cent in volume and 8.1 per cent in value. However, stable demand from local customers resulted in a year-on-year increase in sales value in the supermarket category (including convenience stores) of 0.8 per cent.

During the year Circle K introduced its “OK Stamp It” customer loyalty program through an O2O (online-to-offline) strategy offering customers rewards for each transaction. Its app provides extra value and privileges for customers while also providing the group with customer insights and deeper engagement. Nearly 500,000 customers have signed up as members.

The group’s posted significant growth in both gross merchandise value (GMV) and membership compared to 2015. It was named one of the top 10 e-commerce websites last year by GS1 Hong Kong and Retail Asia Expo.

In Hong Kong, Saint Honore implemented a digital CRM program that enables it to engage with customers on a more personal level. This has recruited 150,000 members.

A store upgrade and modernisation program was launched in China.

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