Top global luxury brands, including Burberry Group Plc and Kering’s Gucci are demanding lower store rents as business in Hong Kong, Macau and the mainland continues to drop.
Prada’s Finance Director Jean-Jacques Guiony said the group will attempt to renegotiate rental arrangements with landlords in view of the weakening sales in Hong Kong. According to sources Gucci may close some of its shops there if those costs don’t come down. Burberry may also try to lower its rent bill after sales growth slowed down since China began discouraging excessive spending by government officials in late 2012. The French luxury goods corporation fully named LVMH Moet Hennessy Louis Vuitton announced sales at one of its flagship brands Louis Vuitton saw a 10 percent fall in Hong Kong, Macau and the mainland in the second quarter from a year back.
Wealthy Chinese are also making fewer trips to Hong Kong and Swiss watch exports to the city slumped 20 percent in the first half. The sales decline is partly due to mainland customers switching to doing more shopping in Japan and Europe as their currencies have weakened.
