Lifestyle International Holdings Ltd. (01212.HK), which operates the popular SOGO department stores in Hong Kong, said its sales are unlikely to be impacted much even if authorities tighten the multi-entry permit policy for visitors from the mainland.
The department stores can adjust their product mix quickly to attract more local shoppers, offsetting any potential decline in mainland tourists and a weak overall retail environment, chief executive Thomas Lau Luen-hung said.
In 2014, Lifestyle suffered its first profit decline since 2008 amid a relocation of the SOGO store in Tsim Sha Tsui and losses made by its Shenyang store which was into its first year of operation.
The average consumption of mainland tourists in Hong Kong has fallen even though the overall visitor volume largely remained the same, said Lau.
The company currently derives about 40 percent of its sales from non-locals, of which 80 percent are said to comprise mainlanders.
The SOGO store in Causeway Bay has seen 3.4 percent growth in total sales last year, outperforming the overall market.
Meanwhile, the relocation of the Tsim Sha Tsui store has wiped off nine months of potential revenues last year, sending the group’s net profit down 12.4 percent to HK$2.14 billion for the whole year.
Lifestyle expects single-digit growth in same-store sales this year, Lau said.
This article appeared in the Hong Kong Economic Journal on March 17.
Translation by Vey Wong
[Chinese version 中文版]
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