Hong Kong counts cost of protests on city's core shopping districts

by Reuters
Monday, 1 December 2014 09:48 GMT

* Oct retail sales +1.4 pct y/y vs Sept's 4.8 pct

* Future sales depend on protests effect on consumer sentiment - govt (Updates with retail sales data)

By Anne Marie Roantree

HONG KONG, Dec 1 (Reuters) - Hong Kong reported a slowdown in October retail sales on Monday, providing the first broad look at the impact of pro-democracy protests on core shopping areas in the Chinese-ruled city after demonstrators blocked key roads and scared off tourists.

Protests began choking parts of the Asia financial centre in late September, disrupting business in one of the world's key markets for luxury companies.

The impact on luxury categories was clear. Sales of jewellery, watches, clocks and valuable gifts slid 11.6 percent, while purchases of clothing dropped 8.8 percent.

Electrical and photographic equipment sales jumped 23.6 percent thanks to strong demand for smartphones, helping retail sales notch a 1.4 percent gain in October to HK$38.3 billion ($4.9 billion). That still represented a slowdown from 4.8 percent growth in September.

"After excluding the boost from the surge in sales of consumer durable goods due to the launch of new smartphone models, retail sales actually slackened to show a year-on-year decline in October," the Census and Statistics Department said in a statement.

"Looking ahead, the retail sales performance in the near term would continue to hinge on the impact of the protests on local and visitors' consumption sentiment," it added.

Three analysts contacted by Reuters had forecast falls of 0.3, 0.5 and 4.4 percent for October from a year earlier. Citi bucked the trend, predicting a rise of 1.2 percent.

There have been annual declines most months this year, including a 6.9 percent tumble in June, blamed largely on a corruption crackdown in China that hurt Hong Kong purchases of luxury goods.

China's "Golden Week" holiday, which ended Oct. 7, is usually one of the year's busiest shopping weeks, but scores of retailers said protests hit sales during the period.

Financial Secretary John Tsang said on Monday there was a risk that 2014 economic growth could be below the government's estimate of 2.2 percent.


Dickson Concepts, operator of the Harvey Nichols department stores in Hong Kong, on Thursday became the latest company to flag an impact from the protests, saying the retail market had further deteriorated as a result of the civil unrest.

That follows warnings from other Hong Kong-listed retailers such as Chow Tai Fook, the world's largest jewellery maker by market value, and Luk Fook Holdings, a dealer for Audemars Piguet, Tag Heuer and other brands of watches.

Chow Tai Fook has said October same-store sales in Hong Kong fell 24 percent.

More than 100,000 people took to the streets at the height of the protests to demand greater democracy in Hong Kong, forcing some shops to close. Others, including Prada and domestic rival Tod's, shortened business hours.

"When there were protests in Admiralty, we didn't come here to shop. It was dangerous with all the unrest and nobody knew what was happening," said a retired man surnamed Lam, referring to the key protest site next to government buildings.

Fresh clashes erupted at the main protest site in Admiralty on Monday as thousands of activists ringed part of government headquarters and forced its closure in the morning. Scores of shops were shut in the morning.

Luxury goods companies have already been under pressure from Beijing's anti-corruption campaign, which has sapped appetite for such goods among mainland Chinese, some of Hong Kong's biggest tourist spenders.

Hong Kong accounts for about $9.7 billion of global luxury sales, or 4 percent of the total, according to estimates by Bernstein Research.

($1 = 7.7544 Hong Kong dollar) (Additional reporting by Kinling Lo, Diana Chan and Michelle Chen; Editing by Richard Borsuk and Jacqueline Wong)

Our Standards: The Thomson Reuters Trust Principles.