Sogo stores will downsize in northern China to focus on the eastern Yangtze River Delta. As the Hong Kong franchisee of the Japanese store, Lifestyle International spun off its Mainland Chinese businesses last July, including department stores and its high-end Jiuguang shopping malls, which had an annual revenue decline of 4.6 per cent last year. After sales in Dalian plunged 61 per cent last year because of an oversupply of malls, the group says it will scale back in the northeastern Chinese city. It shut its Jiuguang mall in Shenyang earlier on the back of a sluggish northern economy. Describing shop closures as the “right direction” for the group, Lifestyle chairman Thomas Lau Luen-hung says that even if the group quit northeastern China, the impact would be “extremely small”. “It would help rather than hurt our business.” Instead, Lifestyle plans to focus on eastern commercial hubs such as Shanghai and Suzhou with their “larger middle- and upper-class population”. Both cities saw sales revenue rise 6.5 and 2.8 per cent respectively last year. Net profit fell 16.9 per cent to HK$1.59 billion (US$204 million) last year. Excluding its mainland business, turnover was down 2.9 per cent to HK$4.67 billion, dragged lower by dwindling tourist spending at its two flagship Sogo department stores in prime Hong Kong shopping hubs. Lifestyle blamed renovations for further dampening sales at its Causeway Bay store, which fell 6.7 per cent last year. “Our supermarket generates daily sales of HK$1 million, so it’s costing us HK$60 to 70 million,” says Lau. Optimistic He is optimistic that the makeover, scheduled to complete in May, combined with a new outdoor LED billboard, the largest of its kind in Hong Kong, will drive foot traffic to the store. Sales at its Sogo store in Tsim Sha Tsui rose 12.4 per cent, bucking the trend of a retail downturn. This was partly because of a rebound in mainland visitors and their demand for beauty products, which accounted for more than half of sales at the store. “Cosmetics products are one of our most recession-proof products,” says Lau, who forecasts the retail market will “stabilise” this year. Hong Kong retail sales were down 8 per cent last year — the worst annual decline in nearly two decades. January sales slightly improved, with the drop narrowed to 0.9 per cent from a year earlier. Department stores were one of the brighter spots for the retail sector as festival shopping ahead of the Chinese New Year in late January boosted sales by 2.8 per cent, after two consecutive months of decline. Cosmetics sales were up 2.8 per cent, but sales of luxury goods such as watches and jewellery fell 4 per cent. In November, Lifestyle splashed a record HK$7.4 billion for a commercial site at Kai Tak, Hong Kong’s former international airport, in a bid to build a retail/office complex that will house a new Sogo store by 2022. The project is estimated to cost HK$13 billion, substantial compared with the group’s total assets of HK$21 billion as of December. Its net debt to equity ratio has surged 10 times to 505 per cent. Lifestyle’s CFO Terry Poon says the group is expected to secure bank loans for the project by the end of this month.
Memebox Hong Kong has opened its first stand-alone flagship store in the city – in Causeway Bay. The brightly coloured store is located at 20 Pak Sha Road, amid the street’s growing collection of sports apparel pop-ups and eclectic cafes.= Headquartered in San Francisco, with global hubs in the US, China, and Korea, Memebox claims to be the fastest-growing beauty brand in the world with over 500 employees across six countries. The company’s newest store stands out externally thanks to a bold red colour scheme and the distinctive laboratory-style treatment area inside. Memebox Hong Kong already has three counters in the city – at Harbour City in Tsim Sha Tsui (Facesss), LAB Concept at Admiralty (Facesss) and Tuen Mun Town Plaza (Kiosk 10). The company’s philosophy is melding beauty with technology. It has collaborated with YouTube celebrities and beauty specialists to create its products and pursues a digital-first approach to marketing. “We’re changing the face of the beauty industry, one smile at a time,” the company proclaims on its website. “We’re dedicated to bringing the best beauty products available to a global, connected audience, since everyone deserves happy skin.”
Local restaurant chain Maxim’s Caterers Limited has selected WE Communications (WE) as its communications partner to launch its first The Cheesecake Factory restaurant in Hong Kong. Through integrated storytelling, WE will continue the momentum of the restaurant’s presence in the region, by continuing to drive a strong brand message, while also managing the restaurant’s owned and paid channels in Hong Kong. To deliver against the needs of the account, the agency has created an integrated team in its Hong Kong office that combines staff and consumer expertise from across digital, creative, content, and PR. The opening marks the 210th The Cheesecake Factory restaurant worldwide, and the second location (after Shanghai) operated under the catering group. The Cheesecake Factory, Hong Kong, is operated by Maxim’s Caterers Limited under an exclusive license agreement for the Asia region. Matthew Lackie, executive vice president of WE APAC said: “In order to accelerate their brand story, WE will implement the right combination of data and insights, creative, and a firm understanding of social channels and media platforms to drive quantifiable and measureable impact.” The Cheesecake Factory will open at Harbour City, Tsim Sha Tsim, this May.
In December 2016, Coach chief executive Victor Luis said that the American-based accessible luxury goods company is ready to open the gates of its stables to more brands. “We believe that Coach Inc. can be bigger than the Coach brand,” he said. “We’ve done quite well in growing the Coach business across the world, especially Asia.” It seems that, after months of speculation, that time has come. According to sources inside both companies, Coach’s acquisition of Kate Spade may be announced in a matter of weeks, if not days. “Coach has a long-standing policy of not commenting on rumors and speculation”. Kate Spade also declined to comment. In 2016, Kate Spade & Company reported net sales of $1.4 billion, with adjusted EBITDA reaching $259 million. Coach ended its 2016 fiscal year with net sales of $4.5 billion, $3 billion in gross profit and $1.9 billion cash, cash equivalents and investments. Michael Kors and Coach immediately emerged as potential buyers, but Coach’s long term, publicly laid-out strategy to increase shareholder value through diversifying assets better aligned. Other than being a bargain, according to activist investor Caerus, insiders suggest that Kate Spade is appealing to Coach because it is a true lifestyle brand, touching several major events in the consumer’s life, including weddings, engagements, special occasion and domestication. Coach, on the other hand, has long owned one milestone — the graduation gift — but remains otherwise disconnected from event-based purchasing. “We believe the growth profile coupled with the brand’s unique appeal to millennials and broad-based success across categories ranging from handbags to apparel and jewelry could be attractive to many buyers, including Coach,” Mizuho Securities analyst Betty Chen wrote in a December 2016 note. Kate Spade is also growing globally, with international net sales of $202 million in 2016, up 7 percent year over year. Those numbers would have been higher but were offset by failed projects, including the closures of Jack Spade brick-and-mortar stores as well as Saturday stores, and the closure of the company’s directly operated business in Brazil. But Coach would not be getting a perfect business with an acquisition of Kate Spade. The aforementioned closure of its hipper, more casual Saturday brand — which suffered from too-fast retail expansion — and the shrinking of its men’s business, once a mainstay in a fast-growing market, indicate that there is work to be done.
Fulllink Shopping Mall Developer: Beijing Fulllink Property Development Limited. GBA: 30,000m2
China World Shopping Mall Developer: China World Trade Center GBA: 60,000m2
Capital Times Square Developer: Beijing Capital New Times Square Development Co., Ltd GBA: 120,000 sq.m
LE MALL Developer: BWCSC GBA: 290,000m2
Yitian Holiday Plaza Developer: Shenzhen YITIAN Real Estate Group Co., Ltd. GBA: 135,800 m2
Seasons Place Developer: Financial Street Holding Co., LTD GBA: 89,000m2