Nov 30, 2015
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Hong Kong retail sales fall for 8th consecutive month

Nov 30, 2015

The value of Hong Kong retail sales fell for an eighth consecutive month in October as a drop in Chinese tourists and weak consumer sentiment hurt spending in the territory.

Retail sales declined 3 percent from a year earlier to HK$37.2 billion ($4.80 billion). That followed a revised 6.3 percent fall in September, a 5.3 percent slide in August. In volume terms, October sales climbed 1.2 percent.

A Chow Tai Fook Jewellery store

"Retail sales showed some relative improvement in October, helped mainly by the visible growth in the sales of certain consumer durable goods amid the launch of new smartphone models," the government said in a statement.

"Yet the fall in the sales of jewellery, watches and clocks, and valuable gifts remained notable, reflecting the drag from the slowdown in tourist spending."

The strong Hong Kong dollar, which is pegged to the U.S. dollar, has made the city an expensive destination. China's tourists are also now heading to more exotic destinations.

"The outlook for retail sales will likely be still constrained by the lacklustre performance of inbound tourism," the government said.

Total tourist arrivals slipped 2.7 percent in October from a year ago. Mainland visitors, which accounted for 76 percent of the visitors to Hong Kong, fell 4.2 percent in the month, according to Hong Kong Tourism Board data.

Hong Kong's comparatively high rents and wages have hurt companies as fewer mainland Chinese tourists have come to the city to buy handbags, watches and designer clothing.

October sales of jewellery, watches, clocks and valuable gifts in value terms were down 17 percent. It compared with a 22.9 percent drop in September and a 8.8 percent decline in August.

Department store sales slid 2.2 percent on the same basis, against a 5.1 percent drop in previous month, while clothing and footwear fell 1.3 percent, against 11.6 percent fall in September.

Last week, cosmetic chain operator Sa Sa International posted a 55 percent fall in its half-year net profit amid a drop in mainland tourists to the city and a stronger currency hit consumer sentiment.

Chow Tai Fook Jewellery, China's largest jewellery retailer by market value, said its first-half net profit fell 42 percent on disappointing sales of gold products in its biggest half-yearly profit decline since listing in 2011.

Smaller rival Luk Fook also posted a 42 percent drop in April-September profit with same store sales down 11.6 percent as mainland tourists were attracted to Europe, Japan and Korea as the countries relaxed visa requirements.

$1 = 7.7501 Hong Kong dollars

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