Hong Kong Retail:July retail sales down 3.1% yoy, sixth consecutive monthly decline

HK retail sales in July decrease 3.1%/4.5% yoy in value/volume 。

    This was a sixth consecutive monthly drop, implying an overall decrease of 1.5% both in value and volume for 7M14. However, compared with June (-6.9%/-7.5% in value/volume), the decline has narrowed. Jewellery, watches and gifts decreased by 22.2%/23.9% in value/volume (vs. 28.5%/27.4% in June) and continued to drive the plunge in retail sales. Electronic goods and department stores also slumped 10.4%/3.7% and 1.3%/3.4% in value/volume, respectively. However, medicines and cosmetics growth accelerated from 6.9%/3.8% in June to 14.3%/10.6%. Footwear too kept up the growth momentum at 10.5%/11.6% (vs. 10.7%/12.7% in June). Excluding jewellery, watches and gifts segment’s retail sales increased 3.4% in value in July and 3.8% for January to July.

    Deutsche Bank view

    In comparison with 2012, segments such as department stores and cosmetics recorded higher sales growth. But for gold, jewellery and watch segment sales were flat compared with 2012 sales. We believe the latter’s performance, being a luxury segment, is more volatile in economic cycles. The yoy slowdown in gold, jewellery and watch sales is due to the gold rush in last year and the macro slowdown. Cosmetics performed better in July, which is in line with what we learn from SaSa. Within HK retail space, we recommend Buy ratings on CTF and Lifestyle.