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Sweden’s H&M to shut Hong Kong store

Swedish fashion retailer H&M has announced that it is closing its flagship downtown Hong Kong store due to high levels of rents being demanded in the city.

Sweden's H&M to shut Hong Kong store

Five years after launching its first Chinese store in Hong Kong’s Central district, the Swedish fashion house is closing the 2,790 square metre retail space, the Wall Street Journal reported.

H&M spokeswoman Cher Chui said the new tenant, clothing retailer Zara, had agreed to pay rent of $1.4 million a month, twice what H&M was paying.

“Retail in Hong Kong is so fast and always expanding, so shops do close and then open up elsewhere. This is quite common in Hong Kong,” Chui was quoted as saying.

Tourism is a major source of retail revenue in Hong Kong, driven by spending from mainland Chinese visitors.

Limited new supply and strong retail sales in 2010 and 2011 saw retail rental growth of about 20 percent last year, exceeding the 2008 peak, according to Fitch ratings agency.

It said China’s economic slowdown could see rents moderate in 2012, while remaining in “positive territory”.

The prestigious shopping hub of Central is prized as a retail space as much for its branding opportunities as for its sales, but soaring rents have seen a trend toward “decentralisation” to other areas.

Chui said H&M had 12 shops in Hong Kong.

“Sales in Hong Kong and China are doing very well,” she said.

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BUSINESS

Swedish retailer H&M sees profits slump after Russia exit

Swedish fashion retailer H&M reportedĀ a sizeable drop in third-quarter profit on Thursday following its decision to leave the Russian market.

Swedish retailer H&M sees profits slump after Russia exit

The world’s number two clothing group is among a slew of Western companies that have exited Russia following Moscow’s invasion of Ukraine.

H&M paused all sales in the country in March and announced in July that it would wind down operations, although it would reopen stores for “a limited period of time” to offload its remaining inventory.

The company said Thursday its net profit fell to 531 million kronor ($47 million) in the third quarter, down 89 percent from the same period last year. “The third quarter has largely been impacted by our decision to pause sales and then wind down the business in Russia,” chief executive Helena Helmersson said in a statement.

The group said in its earnings statement that it would launch cost-cutting measures that would result in savings totalling two billion kronor.

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