×
69 373
Fashion Jobs
ESTEE LAUDER
Lead, Business Analysis, West Coast Cluster Brands
Permanent · Irvine
GAP INC.
Manager, Hroc And People Operations
Permanent · San Francisco
RAG & BONE
Sales Supervisor (Full -Time) - Fillmore
Permanent · San Francisco
SALLY BEAUTY CORPORATE
Outside Sales Representative -Cosmoprof
Permanent · Cleveland
NORDSTROM
Asset Protection - Agent - Bellevue Square
Permanent · Bellevue
DESIGNER BRANDS
General Manager
Permanent · Houston
BANANA REPUBLIC
General Manager - Bellevue Square
Permanent · Bellevue
CENTRIC BRANDS
Senior Manager, Production
Permanent · New York
ADIDAS
Sales Support Representative
Permanent · Carlsbad
ADIDAS
Senior Manager Business Process - Scm Retail Operations
Permanent · Portland
OLD NAVY
Assistant General Manager - Huntington - wv
Permanent · Barboursville
OLD NAVY
Assistant General Manager - Shoppes at Fox River
Permanent · Waukesha
OLD NAVY
General Manager - Walpole
Permanent · Walpole
OLD NAVY
sr. Director, Store Experience & Communications (Remote)
Permanent · San Francisco
OLD NAVY
Asset Protection Service Representative - Woodbury Common
Permanent · Woodbury
ASCENA
Store Sales Manager
Permanent · Baltimore
ASCENA
pt Sales | Stock Lead
Permanent · Aurora
ASCENA
Stock Lead
Permanent · Omaha
ASCENA
Sales Manager—Part-Time/Flexible Scheduling
Permanent · Savannah
ASCENA
Part-Time Sales Manager
Permanent · Phoenix
MACY'S
Asset Protection Detective, Shoppes at Buckland Hills - Full Time
Permanent · Manchester
MACY'S
Manager, Operations - Shipping/Exceptions - 4x10
Permanent · Owasso
By
Reuters
Published
Sep 4, 2015
Reading time
3 minutes
Share
Download
Download the article
Print
Click here to print
Text size
aA+ aA-

Prada tries to renegotiate Hong Kong shop rents amid China slowdown

By
Reuters
Published
Sep 4, 2015

Italian fashion house Prada is trying to negotiate lower shop rents in Hong Kong and Macau to reflect weak sales and the dwindling flow of wealthy tourists from mainland China, its chairman said on Thursday.

However, the Hong Kong-listed group does not plan to shut stores in China, which accounts for more than a fifth of its global sales and has been hit by a rout in stock markets and last month's surprise devaluation of the yuan.


China's economic slowdown is hurting the two shopping hubs, forcing several luxury brands to close shops or at least attempt to lower sky-high rents - with little luck so far.

"Like our competitors we've started re-negotiating rents for shops in weak spots such as Hong Kong and Macau but landlords are not being very receptive, they're rather rigid," Prada Chairman Carlo Mazzi told Reuters in an interview in Milan.

"China has gone from being an El Dorado to being an interesting market. We believe it can return to be a fairly good market but it's hard to say how long it'll take," he said.

Asia-Pacific is Prada's biggest market, representing 36 percent of total revenues. Greater China alone accounts for 22 percent, or 774 million euros.

Betting on fast-rising Chinese consumer demand, Prada picked Hong Kong for its market debut in mid-2011 and used the cash to repay debts and fund a costly retail expansion, opening 260 shops worldwide in four years.

But after being the growth engine of the luxury sector for years, China has become a headache for big brands as its economic growth began to slow. The main stock market index has slumped almost 40 percent since a seven-year high in mid-June.

The Milanese group has seen profit margins fall in recent quarters as revenue weakened while costs rose.

Retail sales in the Asia-Pacific region fell 17 percent at constant currencies in the three months to the end of April, rising marginally only thanks to the foreign exchange boost.

Prada said last month trends in the Asia-Pacific region were little changed due to persistent difficulties in Hong Kong and Macau. It releases full first-half results on Sept. 15.

ALTERNATIVES

"Boosting sales is not an easy goal at this time," Mazzi said. "The phase of massive retail investments is behind us...We need alternatives to the shop network expansion," he added, citing e-commerce and improving returns at existing shops.

Luxury groups are still reeling from Beijing's clampdown on lavish gift-giving and the blow to tourism in Hong Kong from last year's pro-democracy protests.

Mazzi expects sales in the former British colony, where Prada has 22 shops, to recover over time but growth rates are likely to be more modest than in the past.

"We're limiting expansion projects in Hong Kong and Macau," Mazzi said.

But "even with lower sales our Chinese stores continue to have positive - though much smaller - margins. Closing shops in China is not on the table," he added.

"Let's not confuse China with South American markets, knocked down by falling oil prices. China is not down on its knees, it just needs to correct some issues it has with its economy."

Prada, which also owns brands Miu Miu and Church's, has just over 600 stores globally, of which 94 are in Greater China. No clear alternative market has emerged and Mazzi said Prada was not targeting expansion in any particular country.

"There are uncertainties that hold back investments in markets where we had planned to boost our presence, such as Africa," he said, also mentioning logistical and political problems in India.



 

© Thomson Reuters 2022 All rights reserved.