With the coronavirus epidemic greatly reducing inbound tourism, Hong Kong’s shopping malls, which had taken the brunt of months of social unrest last year, remain pessimistic about future prospects for the retail market.
Lifestyle International Holdings, operator of Hong Kong’s popular Sogo department stores, said on Monday that revenue, cash flow and profits from its businesses in the first months of 2020 are expected to decrease, compared with the same period in 2019 — due to the impact of the novel coronavirus epidemic.
Frequent business disruptions resulting from protests and other social incidents forced stores to shorten their operating hours or close completely. This has significantly impacted on the group’s business, particularly during the peak holiday shopping season in the fourth quarter of last year
Lifestyle International
Releasing its annual results, the group said it believes 2020 would be an extremely challenging year for Hong Kong’s retail market as tourist arrivals and consumer sentiment have been badly affected.
Measures taken to curb the spread of the virus in Hong Kong, including closing all but three immigration checkpoints early last month, will further dampen inbound tourism and domestic consumption in the city, Lifestyle International said in its annual report.
Lifestyle International’s 2019 turnover dropped 18.7 percent to HK$3.54 billion (US$0.46 billion), dragged down by the sudden deterioration of retail business caused by social unrest in Hong Kong in the second half of last year.
These developments accelerated a decline in the group’s sales, from a negative growth of 2.4 percent recorded in the first half to negative growth of 19.3 percent for the full year of 2019.
The company's store in Causeway Bay, which has been the scene of multiple anti-government protests, recorded a plunge in both sales revenue and foot traffic in 2019. Sales dropped 19.4 percent for the full year, while it fell 33.8 percent in the second half of the year. The overall foot traffic saw a year-on-year decrease of 15.5 percent.
The group said frequent business disruptions resulting from protests and other social incidents forced stores to shorten their operating hours or close completely. This has significantly impacted on the group’s business, particularly during the peak holiday shopping season in the fourth quarter of last year. It is estimated that a total of 60 business days were affected during the second half of 2019.
Sales income for the store in Tsim Sha Tsui plummeted 46 percent in the second half and was down 18.8 percent for the full year.
However, Lifestyle International’s net profit attributable to owners rose 11.9 percent to HK$1.89 billion in 2019, mainly due to a growth in investment income.
Lifestyle International shares fell 5.52 percent to HK$6.85 on Monday after the group released its annual report.
