Sogo store sales surge on tourism rebound
Sogo store sales on both sides of the harbour surged ahead in the first half of this year.
Causeway Bay recorded a 20 per cent upturn in sales during the six months to June 30, as inbound tourist numbers rebounded and consumer spending improved.
The department store’s parent company Lifestyle International, said footfall increased by 7.1 per cent and what it terms the “stay-and-buy ratio” rose by 2.3 percentage points to 34.7 per cent. The average ticket size (excluding Freshmart supermarket sales) rose from HK$1344 in the same period last year to $1482.
But the store’s greatest growth came in its Sogo Rewards program, with membership rising by 100,000 over the six-month period to reach 480,000. Members accounted for 51.5 per cent of all spending in-store, compared with 45 per cent during the first half of last year.
Executive director Lau Kam Shim said Lifestyle International will continue to optimise the loyalty program to increase sales in its stores.
During the half year, the group managed to capitalise on the uptick in consumption by introducing aggressive sales promotions and it streamlined digital payment services. The biannual Sogo ‘Thankful Week’ event held in May drew an overwhelming response from shoppers, achieving record-breaking sales of $1.307 billion, up 19.7 per cent from the previous record achieved in May last year.
Across the harbour, the Sogo Tsim Sha Tsui store boosted sales by 42.8 per cent, with cosmetics and skin care products the major driver, up 55.4 per cent.
“Sogo TST extended its robust growth momentum with both average ticket size and traffic footfall increasing from the previous period, thanks to stronger inbound tourism and local demand,” said Shim. “Similar to its counterpart in Causeway Bay, the May Thankful Week event at Sogo TST was well received and achieved record-breaking sales revenue of $429.3 million, up 41.9 per cent from the same event in the previous year.”
Trade war warning
While Lifestyle International is bullish about the company’s ongoing prospects, Shim joined the chairman of Lifestyle International’s sister company Lifestyle China, which operates malls on the mainland, warning of potential fallout from the US-China trade war.
“Looking ahead, escalating Sino-US trade tensions and Brexit negotiations could derail the global economic recovery and undermine business and financial market sentiment,” he said in a commentary on the company’s results.
“The weakening of the Chinese yuan against the Hong Kong dollar and concerns over a potential slowdown in China’s economy would also make a dent in Chinese tourist spending in Hong Kong and pose challenges to the steady recovery of Hong Kong’s retailing market.
Notwithstanding the lingering macroeconomic uncertainties, a solid job market, government spending and a still-buoyant property market should continue to render support to Hong Kong’s economy and hence to the local consumption.”
Overall, Lifestyle International’s department store sales rose 26.2 per cent in the first half.
The strong growth was mainly attributable to a 35.3 per cent increase in direct sales and a 19.3 per cent increase in commission income derived from concessionaire and APO sales.
The group’s gross profit margin as a percentage of turnover decreased from 75 per cent to 73.7 per cent, mainly due to higher growth in direct sales relative to concessionaire sales. Net profit attributable to shareholders totalled $882.9 million, down 48.7 per cent on the $1.720 billion of the same period last year. The decline was due to a $56.2 million loss on the group’s financial investments amid a volatile financial market (compared to a $328 million gain last year), profit for a one-off gain in the comparable period of $420.8 million from the sale of its interest in a subsidiary company; and a lower revaluation gain of $108 million compared to the $351.5 million last year in respect of the group’s investment properties, mainly the Kai Tak Land project where it has a development underway.