Hong Kong retailer Dickson Concepts describes the territory’s retail environment as “the most challenging the group has ever faced”.
The company’s retail division suffered a US$27 million loss last year, largely attributable to the impact of Covid-19 and protest activity reducing the number of inbound mainland visitors.
However, the company increased its overall profit by 57 per cent to $83.3 million, based on a solid performance by its investment division which finished the year with a surplus of $110 million after one-off gains on property disposals.
The company said the group achieved significant growth in both sales and profit during the initial months of the financial year.
“However, the retail climate in Hong Kong deteriorated significantly thereafter and Mainland Chinese tourists all but disappeared. As a result of the Covid-19 pandemic outbreak in January, the group faced the worst local consumer sentiment in its history. Tourist arrivals have literally come to a complete halt, and despite achieving sales at the expense of margins, the group’s turnover in Hong Kong suffered a 24.9-per-cent decrease in the year ended March 31.”
Dickson Concepts has 61 stores, 29 of them in Mainland China, 24 in Taiwan and eight in Hong Kong, including the upmarket Harvey Norman department stores at Central and Admiralty. Geographically, Hong Kong accounts for 81.6 per cent of sales and Taiwan 15.6 per cent. Watches and jewellery represent 49 per cent of retail turnover, cosmetics and beauty products 29.6 per cent and fashion 21.1 per cent – all categories heavily reliant on tourists, especially mainlanders.
In a statement, the company said it expects a “slow and long path” to recovery for the territory’s retail sector.
“Our group expects the retail market in Hong Kong to remain extremely depressed for the foreseeable future as we expect local consumer sentiment to be very poor until the economy recovers. We do not expect tourism to recover in any meaningful way in the foreseeable future, since even if quarantine and social distancing measures are fully lifted, it will likely take time for tourists to feel safe to travel again.”
However, the company said that with net cash reserves of $292 million and a strong balance sheet, it is in a strong position to cope with the risk of a worldwide economic slowdown and the current challenging retail climate.