Hong Kong’s “catastrophic retail climate” saw luxury retailer and Harvey Nichols parent Dickson Concepts sales plunge 43 per cent in the September half year.
Hong Kong sales were down by 47.4 per cent. However the company, which also owns ST Dupont, achieved a profit of US$17.2 million (compared to a loss of $15.3 million in the same period last year). That was thanks to strong performance of its investment portfolio and a doubling of profit in Taiwan, strong performance in Mainland China and tight control of operating expenses.
With tourism effectively coming to a halt in Hong Kong, a 20-month-long decline in retail sales and unemployment at a 16-year high in the territory, Dickson Concepts recorded “substantial negative cash flows” in the territory, according to group executive chairman Dickson Poon.
In contrast, Taiwan’s continuing improvement in consumer sentiment and aggressive cost and inventory controls saw profits soar by more than 100 per cent.
And in Mainland China, an expanded presence in both physical retail stores and digital channels saw like-for-like sales grow significantly. “This has successfully enabled the Group to turnaround its China operation from loss making to profits contributing,” Poon said in a statement.
Looking forward, Poon said he remains “extremely pessimistic” about Hong Kong’s retail climate.
“With the arrival of the fourth wave of the coronavirus and with the Employment Support Scheme from the government coming to an end on November 30, the unemployment rate in Hong Kong may further increase and local consumer sentiment may further weaken from the current depressed levels. Despite the possibilities of the re-opening of our borders with China and other Asian countries in the near future, the group does not expect a significant return of tourists in the foreseeable future.”