Hong Kong’s largest music and DVD retailer HMV quietly closed its iconic flagship store in Central last month in a move to lower rental costs, as the city faces its steepest retail downturn since the Asian Financial Crisis.
The closure will be followed by the opening of a new shop this September, just one block away from the old outlet in Entertainment Building on Queen’s Road Central, which will cost the entertainment retailer roughly HK$250,000 less in rent each month.
A sign outside the recently-vacated Central store, which was HMV’s second-largest in the city, read:
“We are closing on 16 April … Exciting new HMV Central opening in September 2016.”
The new shop, located in the basement of Manning House, Central, will be only about 77 per cent of the size of the former, and will cost slightly more than HK$1 million a month in rent, according to Michael Chik, managing director of agency Sheraton Valuers.
He said the rent HMV paid for the two-storey store at Entertainment Building was close to HK$100 per square foot, or HK$1.25 million a month. HMV had leased the space on the third and fourth level since 2011.
Kelvin Wu King-shui, the chief executive and executive director of AID Partners, the former owner of HMV before it sold the business to filmmaker China 3D Digital in March, told the Post that the company decided not to renew the lease because the proposed rent was “too expensive”.
“It was a pity,” Gilbert Ho, managing partner at AID, said.
But he said the decision was not made due to poor sales. In fact, sales at the former Central store had increased by 15 per cent compared to the previous year, Ho said.
“This doesn’t mean we want the landlord to pocket the money,” he said.
Ho said it was easier for the company to find a more visible place with a lower rent given the current market situation. “Why not?” he asked.
A staff member at Onshine Securities, landlord of Entertainment Building, said the company was still seeking a new tenant to replace HMV.
The new tenant would pay about HK$1.5 million per month for the space, but famous luxury brands, such as Gucci and LV, could enjoy a deeper discount, the staff member added.
When the British retailer HMV, founded in 1922, went into administration in January 2013, AID Partners brought its operations in Hong Kong and Singapore. The buyout firm sold 81.63 per cent stake at HMV to China 3D Digital for HK$408 million in March this year. AID is the single largest shareholder of the new owner.
HMV, which currently operates four local outlets, opened its first Hong Kong store in Causeway Bay in 1994. The British brand has had a long bitter battle with the city’s rising rents in the past a few years, closing its Whampoa Garden store and a Causeway Bay store in 2015.
