The multi-zone demonstrations triggered by the ruins of the amendments, as well as the continued trade war between China and the United States and the depreciation of the renminbi, have hit the retail industry in Hong Kong
Jewelry sales are the hardest hit. Xie Ruilin (0417) announced the interim results until September 30, 2019, in which the turnover fell by 14% year-on-year to 1.652 billion yuan, and the profit attributable to shareholders fell by nearly 94% year-on-year to 1.568 million yuan. Basic earnings per share also plunged nearly 94% year-on-year to only 0.6 HK cents, with no interim dividends.
According to the company’s results announcement, according to the regional business, the turnover of Hong Kong and Macao fell by 23.9% during the period, while the same store sales recorded a negative growth of 26.4%. Affected by multi-zone demonstrations and continued social unrest in late June, local consumer sentiment is weak, and local consumers are becoming more cautious about retail spending (especially luxury goods). In addition, social unrest has caused a significant drop in the number of visitors to Hong Kong (especially those from the Mainland), which has plunged the company’s sales performance in Hong Kong.
Will require the owner to reduce rent or rent-free
The company also pointed out that although China and the United States resumed trade negotiations, the days of consensus reached by both sides are still far away, and the economic outlook remains bleak. Therefore, the remaining difficulties facing the retail industry in Hong Kong are likely to continue or worsen for the rest of the financial year. In view of this, the company will continue to optimize its store network, while paying close attention to market conditions and implementing more cost-saving measures, including requiring retail store owners to reduce rents or exempt rents and reduce operating expenses. It is expected that these measures will further enhance the company’s current Cost-effective with the future.
Add a Macao branch to help make up the business
In the face of the current complex and volatile situation in Hong Kong, the company has adopted a cautious attitude towards the development of retail business in Hong Kong for the rest of the financial year. At the same time, the company seized the opportunity to open a new store in the prime location of Macau, which is believed to strengthen the company’s sales network and market penetration in Macau. The company expects that the long-term Sino-US trade tensions and the downward economic pressure brought about by the depreciation of the Renminbi will have a devastating impact on Hong Kong’s retail business. It is expected that the Macau retail business will maintain stable performance during the period.
As for the Mainland business, the company stated that the retail business of self-operated stores in the Mainland accounted for 39.5% of the company’s turnover. As the Sino-US trade war and the two countries’ opposite tariff measures continue, the pressure on the RMB depreciation and the economic growth in the Mainland have slowed down. This resulted in a 8.5% decline in mainland sales and a 7.5% negative growth in same-store sales. In the future, market conditions will be considered and the company will adopt a cautious approach to optimize our retail network in the Mainland.