Kering may close stores in Hong Kong in the mid-term
The Epoch Times reports that Kering Group, the parent company of Gucci, Bottega Veneta, Brioni, Boucheron and Yves Saint Laurent is considering closing some stores in Hong Kong, a dramatic move which would reconfirm the worsening of the performance of some of the group brands in the key luxury market of Hong Kong.
Political and economic changes in mainland China, acerbated by the umbrella movement of mass civil disobedience in Hong Kong, have had a negative impact on Hong Kong’s economy. After China’s new leader Xi Jinping launched a crackdown on extravagant spending and corruption in 2013, mainlanders have been spending less.
According to Kering’s first half results for 2015, “the downward trend in Asia-Pacific” (excluding Japan) was entirely due to the ongoing decline in consumer spending in Hong Kong and Macau.” Sales in mainland China were up year on year, and South Korea and Australia reported solid sales performances in line with the rise in tourist numbers, the report stated.
“We are very lucid about the situation in Hong Kong where we didn’t see any improvement during Q2 2015. Depending on the outcome of the discussions with the landlords and the business situation, we may consider closing stores in Hong Kong in the mid-term.” a Kering spokesperson said in a statement. The company has 58 mono-brand retail locations in Greater China (mainland China, Hong Kong, Macau, and Taiwan).
This adds to the weak performance of the group’s brands in all other regions and the many changes at top management of many of the brands (Alexander Wang recently exited Balenciaga as Creative Director), new senior group executive hired from Unilever for newly created luxury division), confusing creative and brand awareness at Gucci, new CEO at Boucheron, Sergio Rossi in apparent final stages of sale, weak performance at Bottega Veneta, until recently among the few solidly performing companies of the group – all in the past 3 months).