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Strong first half for Circle K Hong Kong parent

Despite weak retail market sentiment, Convenience Retail Asia’s Circle K Hong Kong convenience stores and Saint Honore bakeries achieved solid first-half comparable-store sales growth.

CRA’s interim results show an increase of 9.9 per cent in core operating profit and a 10.2 per cent rise in net profit, mainly because of effective marketing for Circle K Hong Kong and continuing improvement in the Saint Honore business, says CEO Richard Yeung Lap Bun.

During the six months, the group’s turnover increased 3.8 per cent to HK$2.427 billion (US$310.2  million), with turnover for conveniences growing 4.9 per cent to $1.9 billion, and comparable-store sales growing 4.6 per cent year on year.

Bakery turnover eased 0.9 per cent to $491 million, with 5.9 per cent growth in comparable-store sales, offset by fewer festive products sales in Hong Kong.

Gross margin and other income as a percentage of turnover increased by 0.4 points to 36.3 per cent despite competition in the retail market and high manufacturing costs. The group says improvement in the efficiency of Saint Honore factory production was one of the key contributors to the margin growth.

Overall, the group’s core operating profit reached $70 million while net profit was $57 million.

O2O strategy

Membership of Circle K’s O2O CRM program “OK Stamp It” exceeded 750,000 by the end of June. The digital marketing platform was launched in the third quarter of last year as part of a strategy to attract smartphone-savvy consumers and convert online traffic into store traffic. Users download an app to access e-stamp offers and incentives, then visit a Circle K Hong Kong store to redeem them.

At the end of the half-year, CRA operated 331 Circle K stores. Six were opened in the first half while a similar number were closed. Near the end of last year, Circle K opened its first flagship store, in Causeway Bay. This offers a self-service cafe with free high-speed Wi-Fi internet access and mobile phone charging.

The number of Saint Honore stores in Hong Kong and Macau was also constant at 98, with four openings and four closing during the first half. There were also 43 Saint Honore stores in Guangzhou and Shenzhen.

At the end of June the group’s O2O digital retailing platform featured more than 1500 brands and about 25,000 stock-keeping units. Beauty and personal care continued to be the anchor category, while the baby-and-family and healthcare categories showed strong growth.

Gross merchandise volume growth was 20 per cent during the period while membership grew by 300 per cent to 552,000.

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