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Tuesday, March 02, 2021, 18:53
Sogo operator pessimistic about HK's retail market in 2021
By ​Zeng Xinlan
Tuesday, March 02, 2021, 18:53 By ​Zeng Xinlan

In this Oct 5, 2019 photo, a woman walks past the entrances to Sogo department store in the Causeway Bay area of Hong Kong. (MOHD RASFAN / AFP)

Lifestyle International Holdings, which owns two Sogo shopping malls in Hong Kong, holds a pessimistic outlook that Hong Kong’s retail market will continue to bear the brunt of the pandemic. 

The coronavirus has dealt a heavy blow to Hong Kong’s retailers amid a de facto halt in inbound tourism and sluggish domestic consumption in 2020

The Hong Kong-based retail operator expects 2021 to remain challenging for Hong Kong’s economy due to uncertainty over the local pandemic situation and a lack of clarity on travel restrictions. “The battered retail industry is likely to remain under pressure amidst sluggish business confidence and deteriorating employment market in the city,” the company said in its annual financial results. 

Lifestyle recorded a net profit of HK$138.5 million (US$17.9 million) in 2020, 92.7 percent down from the previous year’s HK$1.89 billion. Sales at Sogo’s Causeway Bay and Tsim Sha Tsui malls plunged 36.2 percent and 57.7 percent respectively compared to the corresponding period in 2019. The shopping malls recorded a 43.7 percent drop in revenue amid the significant fall in customer foot traffic as a result of the COVID-19 pandemic containment measures, according to the company’s annual report.

The retailer said the reduced profit could also be attributed to a significant drop in investment income due to a mark-to-market fair value loss of HK$333.8 million and a fair value loss of HK$418.1 million on the investment properties.

ALSO READ: Sogo operator pessimistic about prospects for retail sector

Responding to those figures, the company stock retreated by nearly 3 percent to HK$6.75 on Tuesday. The benchmark Hang Sang Index slid 1.2 percent or 356 points at the close.

Looking ahead, the retail giant expects the market to return to normality by the end of the year, helped by the ongoing roll-out of various vaccines and the continued economic recovery in the Chinese mainland. The company said southbound capital inflows into the city’s stock market would also render support to the Hong Kong economy.

Financial Secretary Paul Chan Mo-po said on Tuesday that he is optimistic that Hong Kong’s economy will pick up momentum from the middle of the year and return to growth. “It’s particularly important to support the retail and restaurant industries to help accelerate the recovery”, Chan said.

The coronavirus has dealt a heavy blow to Hong Kong’s retailers amid a de facto halt in inbound tourism and sluggish domestic consumption in 2020. Alongside a 93.6 percent year-on-year nosedive in visitor arrivals in the city, retail sales plummeted 24.3 percent with sales of luxury goods falling 54 percent.


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