Hong Kong-listed fashion brand Esprit Holdings will not renew the lease for its flagship store in Causeway Bay, local media reports.
Expiring in June, the lease for the 7000sqft (650sqm) store in Leighton Centre has cost Esprit about HK$2 million (US$254,862) a month since 2014.
Esprit chairman Raymond Or says cost saving is not the sole reason for the move. The company also considers location and size as factors. “A large store might not bring about good results,” he told Apple Daily.
JLL national director of research Cathie Chung says Esprit may be shifting its location strategy to be more mall-focused with a smaller shop size, reports Mingtiandi. “Compared to street shops, shopping malls tend to have a more balanced trade mix and guaranteed foot traffic, so it is more likely for Esprit to enjoy spillover benefit from complementary tenants. Promotion activities by malls can also attract shoppers.”
Hysan, which owns the commercial complex where Esprit has been leasing two units, has been marketing the property to potential tenants at the same rate, reports say.
Shop rents in Causeway Bay in the past quarter have dropped 53 per cent from their peak in the fourth quarter of 2014, says Chung who describes the owners’ stance as “rather soft”, allowing for rent negotiations.
Fashion brand Twist last month leased a two-storey shop in East Point Road in Causeway Bay for 56 per cent less than the $1.1 million monthly rent the previous tenant had been paying, while Russell Street, once the most expensive retail destination in the world, has also seen rent cuts. Swatch Group last week, for example, was able to renew its lease for a street-front shop at a rate about a third lower than the $1 million a month specified when it first signed three years ago.
Meanwhile, Esprit had a net loss of $954 million in the second half of last year. CEO Jose Manuel Martinez said the results were below expectation because of weaker sales at its stores because of a drop in customer traffic.