Retail News CRM

Tag: Sales

  • Upswing for Sa Sa International New Year sales

    Upswing for Sa Sa International New Year sales

    With more tourists from the mainland, cosmetic retailer Sa Sa International Holdings saw a 3.5 per cent upswing in sales in Hong Kong and Macau during the Lunar New Year (January 28 to February 3).

    It says there were 10.7 per cent more transactions by tourists from China, while the average value of each transaction shrank by 4.6 per cent.

    Sales to local customers also decreased, by 3.3 per cent, according to the company’s preliminary figures.
    Hong Kong Immigration Department says there was a 12.9 per cent increase in the number of Hong Kong residents travelling overseas through the airport during the Lunar New Year period.

    Sasa chairman/CEO Kwok Siu Ming Simon says that as the group’s sales performance during the period had been affected by several factors, the figures may not reflect overall performance.

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  • Sales up, revenue down for Michael Kors Holdings

    Sales up, revenue down for Michael Kors Holdings

    While retail net sales grew 9.2 per cent to US$836.7 million for luxury lifestyle brand Michael Kors in its third quarter, ended December 31, its revenue decreased 3.2 per cent to $1.35 billion.

    It sales growth was mainly driven by 193 store openings since the end of the third quarter, including 143 stores associated with the company acquiring its the previously licensed outlets in Greater China and South Korea. This resulted in licensing revenue dropping 22.9 per cent to $43 million, but revenue in Asia growing 89.1 per cent to $112.3 million.

    At the end of December, the company had 816 retail stores, including concessions, compared to 623 at the same time the previous year. There were also 128 retail outlets run by licensing partners.

    Chairman/CEO John Idol says the company believes Asia represents a $1 billion opportunity over the long term.
    For the first nine months ended December 31, the company saw retail net sales increase 9.6 per cent to $2 billion while comparable store sales fell 6.6 per cent. Wholesale net sales dropped 15 per cent to $1.32 billion. Gross profit eased 2.8 per cent to $2.04 billion.

    “More work to do”

    Neil Saunders, MD of research company GlobalData Retail, says the poor holiday quarter shows that Michael Kors has a lot more work to do before it is back on track.

    “The numbers provide a marked contrast to those of Coach, a company going through a similar brand reinvention, which had a much more positive third quarter. To be fair, the overall decline is partly because of the decision to cut back on distribution through department stores and other channels, which Michael Kors believes have been undermining its brand through excessive discounting, ” says Saunders.

    While the resulting 17.8 per cent slide in wholesale revenues and 22.9 per cent drop in licensing revenues was painful. “We believe the decision to dial back is a necessary step in making the brand less ubiquitous, and driving higher margins.

    “However, the issue is that the reduction in the number of doors through which Michael Kors is available is not immediately translating into an uplift in sales through its own stores. With a 9.2 per cent rise in retail sales, the numbers look robust enough, but most of this is down to store openings and the shops acquired in Asia where Michael Kors bought out the brand licence.”

    Saunders says the underlying comparable sales tell a more revealing story. “These remain weak and have actually deteriorated since the previous quarter. Only a small element of this decline is because of the stronger dollar; indeed, on a constant currency basis same-store sales are still down by 6.4 per cent.

    “As much as we believe that Michael Kors is headed in the right direction, and that its new lines are generating interest, it has much more work to do in reconnecting with customers who have been alienated by the overexpansion of the brand. As yet, it is simply not exciting customers in the same way that Coach or Kate Spade are. ”

    Saunders says that reconnecting customers with the brand is particularly important as Michael Kors expands its range.

    “The new Access smartwatches and fitness trackers, and the new fragrance lines are sensible additions to the portfolio. However, they will only really drive sales as part of a strong lifestyle brand that consumers want to buy into. In our opinion, on this front Michael Kors has more convincing to do. ”

  • Salvatore Ferragamo Hong Kong sales still weak

    Salvatore Ferragamo Hong Kong sales still weak

    Despite business still being weak in Hong Kong, Asia Pacific was again been the top market in revenue terms last year for Italian design label Salvatore Ferragamo.

    Preliminary figures show the group’s consolidated revenues for its latest fiscal year reached €1438 million (US$1.5 billion), up by 1 per cent at current exchange rates and down by 2 per cent at constant exchange rates from the previous 12 months.

    Asia Pacific contributed 36 per cent of total revenue for the year, up by 1 per cent. Growth was more than 4 per cent for the fourth quarter. The positive performance was achieved despite lacklustre sales for Salvatore Ferragamo Hong Kong.

    In Japan, the brand had stable revenues last year, with a 3 per cent rise in the fourth quarter.

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  • Korean sales +30.9% to $10.6bn as growth slows

    Korean sales +30.9% to $10.6bn as growth slows

    South Korea’s duty free industry saw total sales grow by +30.9% or $2.5bn to a record-breaking $10.6bn in 2016, although senior sources in Seoul tell TRBusiness that sales growth is expected to slow to between 10% to 15% in 2017 – resulting in incremental sales of between $1bn to $1.5bn.

    These estimates nevertheless assume that foreign tourist numbers (primarily Mainland Chinese) continue to increase in 2017 as expected.

    According to senior sources in Seoul, foreign visitors’ duty free purchases amounted to US$7.6bn in 2016, accounting for 72% of South Korea’s total US$10.6bn purchases last year. This sales result includes contributions from all airport, seaport and downtown shops (including internet) sales and ‘domestic duty free’ sales on Jeju Island, although it excludes inflight duty free sales.

    BIG CHINESE TOURIST DEPENDENCY

    Highlighting the dependence on foreign tourists for duty free growth, South Korean travellers’ share of sales came in at $2.9bn last year, which was equivalent to 28% of the national duty free revenue total.

    “In 2015 we had a big impact from MERS on our duty free market from July to October, then the market recovered from November. It meant half of 2015 was impacted by MERS so we had a big 31% sales increase last year,” said a senior industry duty free source in Seoul.

    He told : “Sales to foreign tourists increased about 40% last year in value, about 80% of them are Chinese; but sales to South Korean travellers saw only a 9.7% increase.

    A busy cosmetics counter at the Lotte World Tower duty free shop in Seoul.

    Meanwhile, per capita duty free spending amongst foreign visitors grew last year, allaying fears among duty free operators that changes made to China’s luxury goods import regulations in April might force a reduction in individual spending.

    20.6M FOREIGNERS BOUGHT DUTY FREE

    According to industry figures, a total of 20.6m foreign visitors bought duty free products in South Korea last year – a rise of 28% compared to those purchasing in 2015.

    In addition, 27.9m South Koreans purchased duty free goods last year – an increase of 13.6% compared to 2015.

    “Sales to foreign customers increased 40% in value and the number of foreign customers rose by 28%, so total per capita spending by foreign visitors increased last year,” said the source.

    By contrast, South Korean per capita customer spending slowed slightly in 2016 as total South Korean duty free purchases rose by 9.8% in value, although this was less than the rise in the number of customers making purchases.

    As expected, perfume and cosmetics continues to dominate as South Korea’s largest duty free category accounting for more than 50% of duty free sales, with Lotte Duty Free – the country’s leading operator – generating total sales of $5.7bn, of which perfume and cosmetics sales accounted for almost $3bn. These sales included all of Lotte’s various downtown and airport stores.

    HOTEL SHILLA SALES REACHED $2.6BN

    Hotel Shilla Duty Free was the next biggest operation with total sales registering $2.6bn in 2016 (not including its HDC Shilla joint venture in Seoul) and once again, perfume and cosmetics accounted for a large share of revenue.

    Other South Korean duty free operators – including new entrants to the industry – also registered good P&C sales, with many finding it easier to arrange supply deals with local cosmetics manufacturers rather than international brand suppliers.

    “The numbers are incredible; cosmetics is the number one item for Chinese visitors,” said the senior source. “South Korean cosmetics brands are about 60% of the purchases and imported cosmetics are 40%. South Korean cosmetics are very good quality and the prices are reasonable.

    “South Korean cosmetics companies are developing products to please East Asian customers, as their skin texture is different. They know what products Chinese visitors are looking for. South Korean face mask products are very famous with Chinese customers.

    SOUTH KOREAN COSMETICS GROWTH

    “The other thing is the price gap between the South Korean and Chinese markets. There are big perfume and cosmetics import tariffs in China; also, Chinese people do not trust products made in China, as there are many fake products.”

    While duty free operators are obviously happy to see products fly off the shelves, a number of perfume and cosmetics brands and luxury goods brands have started to limit the volumes sold to individual customers, as suspicions grow amongst some suppliers that not all these purchases are for personal use.

    ‘SURROGATE SHOPPERS’ ARE A CONCERN…

    “Many people are saying that a significant ratio of purchases are by surrogate shoppers,” said the source. “As foreign brands begin to withdraw from China, so mainland tour companies are sending tourists here to buy luxury branded goods and pay them a commission for buying.

    “The travel companies collect these products for re-sale in China, as there is a 30% to 40% price gap between South Korea and China because of the luxury goods tariffs. Chinese wholesalers organise these purchasing trips; they’re common now.”

    Individual brand product purchasing limits also vary, with most international P&C brands – along with top South Korean brands – limiting the number of pieces sold to individual customers to five items. For luxury fashion goods and accessories, many international brands also limit purchases to one or two items per customer.

    “The purchase limits are set by the brands, not the operators; the operators only think of profit. It’s the same around the world,” the source remarked.

    Foreign visitors are the major customers in South Korea’s downtown duty free stores, spending $6.4bn in downtown outlets in 2016, a huge figure which is five times the value of foreign traveller purchases worth $1.1bn in airport duty free shops last year.

    AIRPORT SALES EQUALLY DIVIDED

    Foreign and South Korean customers each accounted for half of the country’s total airport duty free sales that were worth $2.4 billion in total in 2016, of which the major share was recorded at Incheon International Airport.

    South Korean customer purchases were divided equally between downtown and airport shops, with spending reaching $1.3bn in the country’s downtown stores and $1.2bn in international airport shops last year, plus almost $500m was spent in Jeju Island’s domestic airport and seaport duty free shops.

    Foreign visitors accounted for 83% of all downtown store duty free purchases worth a total of $7.7bn in 2016, according to industry figures. Outbound South Korean traveller purchases accounted for just 17% of downtown duty free stores’ overall sales and included online and internet purchases estimated to account for 25% to 30% of total downtown revenue.

    More than 80% of purchases in almost all downtown duty free stores in South Korea were made by foreign customers (primarily Mainland Chinese) with the exception of the Shinsegae Duty Free and Lotte Duty Free Busan downtown shops, where South Korean customers accounted for 48% and 34% of purchases respectively.

    In addition, foreign visitors accounted for 71% of total sales in South Korea’s various SME downtown duty free stores, which recorded combined total sales worth $68m last year, a sales total equivalent to less than 1% of the nation’s total duty free revenue.

    Meanwhile, government policy to increase the number of duty free operator licenses in an effort to reduce large conglomerates’ dominance of the domestic duty free market has led to increased competition.

     

    LOUIS VUITTON STILL DELIVERS…

    “Last year there were 8m Chinese visitors to South Korea,” said the source. “South Korea’s duty free market is very concentrated and it’s difficult to make money as travel agents dominate an important share of the market. If they do not send tourists here there will be no group tour sales, so they receive huge a commission from South Korean duty free operators.

    “Two to three years ago the maximum commission paid was 20% for group tour customers, but nowadays over 30% is being paid. It’s impacting on operator profits. Most small operators and new starters cannot expect a profit – it’s a severe and critical problem in this market.”

    This follows the opening of new downtown stores in Seoul over the past 18 months by Shinsegae Duty Free, HDC Shilla, Doota (Doosan), Hanwha Galleria and SM Duty Free and another four downtown stores are also scheduled to open this year.

    As reported, Lotte has only recently reopened its Lotte World Tower store after winning a new downtown license, while three completely new downtown stores are scheduled to open in the capital city.

    DIPLOMATIC FALL OUT DUE TO MISSILE DEFENCE SYSTEM

    Work is underway preparing the Shinsegae Kangnam and Hyundai CO-EX duty free stores that are scheduled to open in Seoul’s growing southern area by the end of 2017 – along with the SME Top City Sincheon (City Plus) store in the capital’s western region.

    Meanwhile, one large dark cloud on the horizon is the deterioration in South Korea’s current diplomatic relations with China, which are causing serious concern for duty free operators.

    This has resulted in a dramatic reduction of Chinese visitor arrivals in both November and December, according to the Korea Tourism Organization.

    At the same time, South Korea’s current domestic political crisis, after the National Assembly voted to impeach Park Geun Hye over corruption allegations, has left the country in a leaderless limbo with no major statesperson in place to handle the escalating dispute with China – until new presidential elections in the spring of this year.

    GROUP TOUR NUMBERS ARE SUFFERING

    Some operators say this dispute has already prompted Beijing to quietly reduce group tour numbers visiting South Korea in January, as a clear warning that it means business with its protest against Seoul installing the proposed Terminal High Altitude Area Defense (THAAD) defence system.

    “South Korea’s duty free market should be increasing this year by 10% to 15%, but already in January we are losing the group tour market. We have already felt impact from South Korea and China’s tension,” said the source.

    “We will have presidential elections in April or May. Now there is no president as President Park is impeached and the South Korean government cannot react to China properly.

    “For the first half of 2017 we will be impacted by the China group tours situation. Also, Chinese customers are getting smarter and they are looking not only for luxury products, but reasonably-priced products and leveraging down their spend.”

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  • Growth for Coach China

    Growth for Coach China

    New York design house Coach reports “notable strength” in Mainland China while reporting its second-quarter results for the quarter ended December 31.

    Coach China sales were roughly even but increased 6 per cent on a constant currency basis when the impact of the strong US dollar was removed. In addition, there was a “significant” improvement in the quarter for Hong Kong and Macau.

    “We are both pleased and proud of our performance this holiday season, particularly in light of the challenging and volatile global retail environment,” says CEO Victor Luis, noting that China represents “significant opportunities” for its brands.

    “And, despite our deliberate pullback in the North America wholesale channel as well as currency headwinds, we delivered double-digit earnings growth in the quarter. ”

    Second-quarter net sales totalled $1.32 billion for the second fiscal quarter, an increase of 4 per cent over the same period the previous year, including a benefit of 40 basis points related to currency translation.

    Gross profit totalled $906 million, up 5 per cent. Gross margin for the quarter was 68.6 per cent compared to 67.4 per cent in the year-ago period, while net income for the quarter was $200 million.

    Net sales for the Coach brand totalled $1.20 billion for the quarter, an increase of about 2 per cent. This included international sales of $440 million, up 3 per cent.

    Continued strength

    This growth was driven in part by positive comparable-store sales overall with continued strength in Mainland China.

    In Japan, sales rose 9 per cent in dollar value, but eased 2 per cent in constant currency, impacted by a lower Chinese tourist spend.

    Sales eased for the group’s other directly-run businesses in Asia.

    Gross profit for the Coach brand rose 4 per cent to $830 million. Gross margin for the quarter was 69 per cent, including about 30 basis points of benefit from currency. This compared to 67.7 per cent for the quarter in the previous year.

    Net sales for the group’s Stuart Weitzman brand reached $118 million for the quarter compared to $94 million in the same period the previous year. This 26 per cent improvement was driven by strong growth in the brand’s direct channels, and was positively impacted by a wholesale shipment timing shift from the first quarter.

    Gross profit for Stuart Weitzman rose 26 per cent to $76 million, while gross margin was even at 64.3 per cent.

  • Swatch Group confident despite profit dive

    Swatch Group confident despite profit dive

    While Swatch Group profits nearly halved last year in a weak global watch market, the Swiss company is predicting “healthy growth” ahead.

    Swatch Group owns such luxury brands as Breguet, Longines and Omega as well as marketing watches carrying its own name.

    Net profit fell 47 per cent to 593 million Swiss francs (US$598 million) last year while sales came in at 7.5 billion francs.

    Watch and jewellery sales dropped by nearly 11 per cent as 2015’s marked slowdown ran into last year. However, by the end of the year there was fresh movement in sales, especially in China, says Swatch.

    From November to January there was “very good growth” in the segment, particularly in Mainland China, says the group, noting “a substantial improvement in operating margin.”

    “Based on the positive development of the past three months, healthy growth is expected for this year.”

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  • First ever sale kicks off on AirAsia India social channels

    First ever sale kicks off on AirAsia India social channels

    Riding on the increasing digital penetration in the Country, AirAsia India is launching its first ever ‘Big ASS’ Sale on its social channels at 2130 hours on Thursday, 2 nd February 2017.

    Here’s the chance for travel enthusiasts to pick up their bags, without thinking twice and head out to their favourite destinations immediately! By immediately, we mean as early as NOW till 30 th April 2017.

    Unable to hold on to your excitement? Don’t lose time! between 3 rd & 5 th Feb 2017 and get going! What’s more thrilling than indulging yourself in an unexpected holiday? It is the amazing fares that come with it! Your Goa dreams are finally coming true – fly to Goa from Bengaluru or Hyderabad at INR 899 (All-inclusive).

    It’s the perfect time to plan those long weekends coming up in Feb, March and April! There’s so much for you to explore in India and beyond – Kuala Lumpur & Bangkok. AirAsia India currently flies to 11 destinations with its two hubs in Bengaluru & New Delhi covering Chandigarh, Jaipur, Guwahati, Imphal, Pune, Goa, Visakhapatnam, Kochi and Hyderabad. The airline will start flying to Srinagar & Bagdogra form 19 February 2017.

    Keep yourself updated with AirAsia’s latest promotions and activities via Twitter

    (twitter.com/AirAsiaIN) and (facebook.com/AirAsiaIndia).

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  • South Korea Dec department store sales rebound from Nov, reverse two declining years

    South Korea Dec department store sales rebound from Nov, reverse two declining years

    Sales at South Korea’s department stores in December rebounded from November on year-end gift purchases, trade ministry data showed on Monday, while sales for the whole year ended on a positive note, reversing two years of decline.

    Combined sales last month at department stores run by Hyundai Department Store, Lotte Shopping and Shinsegae Co rose 3.3 percent on-year, the Ministry of Trade, Industry and Energy said, bouncing from a 2.8 percent decline in November.

    Nearly all product categories saw rises in sales, which were led by offshore brand items and food products.

    Retail data has shown consumption has not fallen markedly since an influence-peddling scandal involving President Park Geun-hye engulfed the country late last year, although consumer sentiment is at its worst in nearly eight years.

    The central bank governor, Lee Ju-yeol, said earlier this month private consumption is likely to head down in 2017 due to uncertainties at home and abroad, hampering overall growth.

    Discount store sales, meanwhile, slipped 1.9 percent in December over a year earlier, the same trade ministry data showed, although not as bad as November’s 6.1 percent decline.

    In 2016, department store sales rose 3.3 percent, breaking two years of falls and rebounding from a 1.2 percent fall in 2015. Demand for luxury goods and large household appliances such as televisions and refrigerators bolstered sales, the ministry said.

    Discount store sales fell 1.4 percent in 2016, declining for a fifth straight year, the data said, as more consumers bought food items online from a widening variety of vendors.

    In 2015, discount store sales dropped 2.1 percent.

  • Toyota Philippines To Increase Production Despite Looming Excise Tax

    Toyota Philippines To Increase Production Despite Looming Excise Tax

    Toyota Motors Philippines (TMP) has made it clear that it is still looking at increasing its production in 2017. This is despite a looming excise tax that may soon be imposed in the industry and bring vehicle retail prices significantly up.

    Modest production target to begin with

    “We’re projecting a minimum 10 percent growth. So this year we started conservatively. Of course, the looming excise tax is an issue that we have to be aware of,” Business World Online quoted TMP Vice-Chairman Alfred Ty as saying. The company has long been committed to increasing its production as part of its involvement in the Comprehensive Resurgence Strategy (CARS) Program that had been established during the Aquino administration. Aside from TMP, Mitsubishi Motors Philippines Corporation has also agreed to participate in the CARS program.

    The goal had been to produce at least 200,000 vehicles in a span of six years, averaging at 33,333 vehicles each year. In 2016, TMP managed to produce as much as 55,028 units, with its top-selling Vios and Innova vehicles assembled in its facility in Laguna.

    Tax will hurt luxury vehicles the most

    Ty has also said that since the looming excise tax will impact the luxury market more, he believes the impact may be small. “We understand where we’re coming from but we also have to be careful not to kill the market because again the luxury cars from this country do not even comprise 1 percent of the total cars,” he explained. This would readily affect Toyota’s Camry and Fortuner models.

    According to a report from Business Mirror, a vehicle selling from P600,000 to P1.1 million will be subject to an excise tax of P24,000 plus 40 percent of the value in excess of P600,000. Meanwhile, higher priced vehicles will be subject to significantly higher tax. For instance, vehicles with a retail price of P2.1 million may face a tax amounting to P1.22 million. Vehicle buyers would also have to pay 200 percent of the value exceeding P2.1 million in additional tax.

     

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  • China retail sales grow 10.4 pct in 2016

    China retail sales grow 10.4 pct in 2016

    China’s retail sales of consumer goods, a key indicator of consumption, grew 10.4 percent year on year in 2016, the same as the first three quarters, official data showed Friday.

    Retail sales grew 9.6 percent year on year after deducting price factors, according to the National Bureau of Statistics (NBS).

    Total retail sales of consumer goods hit 33.23 trillion yuan (4.84 trillion U.S. dollars) last year.

    The data showed strong consumption potential in rural areas, with retail sales expanding 10.9 percent, outpacing the 10.4 percent rate in urban areas.

    The NBS said that retail sales of communication equipment and housing goods had grown fast. Sales of communication equipment jumped 11.9 percent year on year, furniture went up 12.7 percent, and building and decoration materials climbed 14 percent.

    The catering industry garnered 3.58 trillion yuan in revenue last year, up 10.8 percent year on year.

    Online sales boomed, surging 26.2 percent year on year to reach 5.16 trillion yuan.

    Per capita spending was 17,111 yuan, representing a nominal growth of 8.9 percent year on year, though real growth was 6.8 percent after deducting price factors.

    In December, nominal growth of retail sales was 10.9 percent year on year, slightly higher than the 10.8 percent increase in November.

    Retail sales contributed significantly to China’s economic growth as the country shifts from an export-driven economy to a consumer society.

    Consumption contributed 64.6 percent of China’s economic expansion in 2016, the NBS said.

    Retail sales of consumer goods are expected to jump by 10.2 percent year on year to exceed 37 trillion yuan in 2017, contributing more than 70 percent of the country’s economic growth, according to a report issued by the China General Chamber of Commerce.

    China’s economy grew 6.7 percent year on year in 2016, well within the government’s annual growth target of 6.5 to 7 percent.

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  • Luxury cars flooding Vietnamese market

    Luxury cars flooding Vietnamese market

    From now to 2020, Mercedes Benz Vietnam plans to double its sales agent network, an important step for the luxury car manufacturer to cement its position in the Vietnamese market.

    Speaking to local mass media on December 3, Choi Duk Jun, CEO of Mercedes Benz Vietnam, said together with the expansion of product items, the enlargement of sales agents will be a strategic move that helps Mercedes increase its market share in Vietnam.

    Mercedes Benz has the highest number of sales agents in Vietnam with 12 centers throughout the country.

    Sources said Rolls-Royce, a brand of German BMW, which also owns two other strong brands – BMW and Mini — is also preparing to enter the Vietnamese market.

    Toyota Vietnam has opened an authorized agent in the central region, raising the number of total sale agents in Vietnam to 44.

    Ford Vietnam has opened an authorized agent in Binh Duong province, while it has upgraded Pho Quang branch of Sai Gon Ford into a 3S branch. It is preparing to open another showroom, belonging to Sai Gon Ford, in the central business district 1 in HCMC.

    The new centers are reported as having investment capital of VND120 billion. The number of Ford’s sales agents and service centers in Vietnam has increased to 27.

    The Vietnamese market had its highest sale growth rate of 60,000 cars in 2016 compared to 2015.

    The sale of luxury cars and sports cars also increased sharply. Mercedes led the market segment with 4,401 cars sold in 2016, an increase of 22 percent over the year before.

    Meanwhile, Lexus sold 1,665 cars, up by 73 percent. Audi, Porsche and BMW  have not revealed the sales, but reported growth.

    A source said Porsche had fulfilled its yearly sales plan in Vietnam by mid-2016.

    The sales surprised many analysts, because prices had increased sharply.

    Lexus LX570, for example, saw the price increasing from VND5.7 billion to VND8 billion, while Maybach S600 was from VND10 billion to VND14 billion. Rolls Royce Phantom price soared from VND54 billion to VND84 billion.

    Oxfarm, a non-government organization, on January 12 released a report on inequality in Vietnam, pointing out that the income gap between the richest and poorest Vietnamese people is very large. The richest Vietnamese has the daily income higher than the 10 year-income of the poorest.

    In related news, Marquardt from Germany had a working session with Da Nang authorities on its plan to set up an automobile part factory in the city.

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  • Restructuring bites into McDonald’s global sales

    Restructuring bites into McDonald’s global sales

    Restructuring has taken its toll on McDonald’s global sales as the company refranchises store networks in Asia.

    The US fast food giant reported what one analyst described as a “sombre result” overnight, its fourth quarter sales falling by 1.3 per cent in the US market. However, two-thirds of its sales are achieved outside the US, where the company’s turnaround plan is further advanced.

    Global same-store sales rose 2.7 per cent, but overall sales fell by 5 per cent as the company worked towards spinning off its rights in Korea, China, Malaysia and Singapore.

    In the UK and Germany, McDonald’s is benefitting from technology upgrades such as self-service kiosks, which are also being installed in Hong Kong. Sales in what McDonald’s describes as its “international lead markets” rose 2.8 percent in the fourth quarter.

    Neil Saunders, CEO of Conlumino, said McDonald’s ends its fiscal year on a somber note with figures that put pay to the early optimism which surrounded its turnaround program.

    “McDonald’s is now lapping some tougher comparatives, especially in the US where, this time last year, it was reaping the rewards of menu reconfiguration and the introduction of the All Day Breakfast. These changes were supposed to drive a steady and sustainable uplift in spending rather than a one-off spike in sales, but it is increasingly clear that this strategy is not delivering through.”

    Saunders says widening the audience in a sustainable way is the key issue for McDonald’s as it enters the new fiscal year.

    “This has to be more than about menu change – including the recent introduction of multiple sizes of Big Macs which, in our opinion, does nothing to create step change or to increase real choice. Indeed, it is clear that the menu changes made so far have not completely reinvigorated the brand with younger and more discerning consumer segments, many of whom still shun the chain in favor of what they see as more premium offerings from other players.”

    Saunders believes the majority of the growth is at the quality end of the market, a segment where McDonald’s – which is seen as fast, convenient and low priced – still does not squarely play in the US – although it has made strides in some Asian markets, especially Thailand, with its customisable burgers.

    “In our view, McDonald’s needs to think more fundamentally and more holistically about how to play in this space. This includes looking at the state of its US restaurants – some of which leave a lot to be desired. It also means being more radical, perhaps opening a new type or brand of restaurant with a more premium proposition. What’s clear is that more fundamental change is needed to transform the US business.”

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  • Cebu Pacific-Visa tie up for exclusive international seat sale

    Cebu Pacific-Visa tie up for exclusive international seat sale

    Cebu Pacific (CEB) allies with Visa to offer all-inclusive seat sale fares to some of the most popular international destinations within its extensive flight network.

    The seat sale exclusive for Visa cardholders, started last January 16, 2017 and will be available until January 22 (or until seats last). Flights will be for travel from May 1 to September 30, 2017.

    Cardholders who wish to make the most out of this year can still catch the last few days of the sale and book flights from Manila to Hong Kong for as low as P1, 599. Seats from Cebu, Clark, Davao and Iloilo to Hong Kong and Singapore are also available at the same low fare.

    Those who want to visit Busan and Incheon from Manila can avail of flights for as low as P2, 099. Flights to Incheon from Cebu and Kalibo and flights to Singapore, Guangzhou and Xiamen from Manila are also up for grabs at the same all-in fare. Passengers can also fly from Manila to Beijing and Shanghai (P2, 599), Guam (P3, 099) or Sydney (P4, 199).

    All fares quoted are for one-way flights, and are inclusive of country-specific taxes, web admin fee and terminal fee. Baggage allowance, meals, travel insurance and other ancillaries may be added to the fare per the passenger’s preference.

    To avail of this exclusive seat sale, Visa cardholders only need to input the promotional code “VISA” through www.cebupacificair.com. Terms & conditions apply.

    CEB currently offers flights to a total of 37 domestic and 29 international destinations, operating an extensive network across Asia, Australia, the Middle East, and USA. Its 57-strong fleet is comprised of four Airbus A319, 36 Airbus A320, seven Airbus A330, eight ATR 72-500, and two ATR 72-600 aircraft. Between 2017 and 2021, CEB expects delivery of one more brand-new Airbus A330, 32 Airbus A321neo, and 14 ATR 72-600 aircraft.

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  • New law to stop minors in Hong Kong buying alcohol from shops

    New law to stop minors in Hong Kong buying alcohol from shops

    Convenience stores and shops across Hong Kong will be banned from selling alcohol to minors under new legislation to be proposed by the government this year as it steps up efforts to tackle a rise in underage drinking.

    The law, if passed by the Legislative Council, will prohibit retailers from selling liquor to anyone under the age of 18 – the same as the current restriction on the sale of tobacco.

    Although the city’s bars and clubs are already banned from serving or selling alcoholic drinks to minors, retailers do not have to follow the rule. Leading retail chains such as 7-Eleven have agreed ­voluntarily to refuse to sell liquor to anyone below 18, but staff seldom bother to check the age of customers. This is a problem that has been confirmed by various studies and demonstrated in a test conducted.

    The new move by the Food and Health Bureau comes amid criticism that Hong Kong is slipping behind other developed cities in its handling of underage drinking, and that it remains easy for teenagers to enjoy a tipsy night.

    “The proposed statutory regulatory regime will cover all forms of commercial sale and supply of alcohol, including internet sale … and from the vending machine,” a spokeswoman for the bureau said, confirming the plan to table the legislation this year.

    Sellers will also have to display signs stating that no alcohol may be sold or supplied to anyone aged below 18.

    A government poll in 2014 found that 56.2 per cent of the city’s students had tried alcohol, with 21.9 per cent of those aged 10 or below saying they had done so.

    Last year the Centre for Health Protection found that 43.1 per cent of 1,630 people polled had taken their first sip of alcohol before the age of 18. It also showed a worrying rise in binge drinking among students.

    The Medical ­Association, the city’s largest doctors’ group, said 77 per cent of the 1,003 people it polled supported banning the sale of alcohol to those below 18.

    Allan Zeman, ­chairman of the Lan Kwai Fong Group, supported the move, saying anti-social behaviour among the young at nightspots might damage Hong Kong’s image abroad.

    “Some of the retail chains are very powerful here. I think we should look at what other cities in the world have done and get tough about this,” Zeman said.

    A 7-Eleven spokesman said the chain supported legislation banning the sale of alcohol to those aged below 18.

    The Hong Kong General Chamber of Wine & Spirits has previously said it supports an age limit on the sale of alcohol, but it should be set at 16.

  • Trading brightens for Luk Fook Holdings

    Trading brightens for Luk Fook Holdings

    Jeweller Luk Fook Holdings (International) reports a turnround to positive growth in its same-store sales for its third quarter, ended December 31.

    With a relatively low base, the same-store sales growth for the period recorded a “substantially narrowing decline” of 10 per cent from 37 per cent in the second quarter.

    Since September, same-store sales of gemset jewellery products in Mainland China have achieved double-digit growth for four consecutive months.

    Luk Fook’s same-store sales for the quarter turned into a positive growth of 20 per cent from a decline in the previous two quarters. Together with the 2 per cent growth of same-store sales in gold products, mainland sales for the quarter started to see positive growth (5 per cent) for the first time in the current fiscal year.

    The group ended the quarter with 11 new shops – nine in Mainland China and two in Kuala Lumpur. However, it closed an outlet in Macau.

    There was also an increase in its licensed shops in China, with 28 at the end of December. There were 195 own-brand shops – 129 in China, 47 in Hong Kong, 10 in Macau and nine in other countries.

    Together with 1297 licensed shops in China and one in Korea, there were 1493 Lukfook outlets worldwide, of which 1426 shops were in China.

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