Federer-Backed On Sneaker Brand to Open First Hong Kong Store
(Bloomberg) — US-listed On Holding AG is planning to open its first store in Hong Kong, according to people familiar with the matter, the latest in a slew of brands looking to the shopping hub as a potential buffer against weaker sales in China.
Swiss sneaker maker On — backed by tennis legend Roger Federer — has identified a store of more than 3,000 square feet at H Queen’s, a trendy building owned by Henderson Land Development Co. in Hong Kong’s Central business district, said the people, who asked not to be identified discussing private deals.
Rent is around HK$600,000 ($76,700) per month — roughly double the price paid by the space’s previous tenant, a bakery by French celebrity pastry chef Dominique Ansel — but still down some 30% from peak levels for a similar-sized spot in the building before Covid, the people said.
A representative for On said the company could not immediately comment. Henderson Land declined to comment.
Renewed Interest
The shoemaker, which already has 22 stores in the mainland, is expanding into Hong Kong as economic woes fuel caution among once-flush Chinese shoppers. The financial hub’s concentration of well-heeled residents is leading some international brands, notably those peddling luxury goods, to see the city — just across the mainland border — as better equipped to handle uncertainty.
Read More: Hermes Expands in Hong Kong Betting on Return of Luxury Shoppers
Rents for Hong Kong’s commercial properties — once some of the world’s most expensive — have also fallen significantly from pre-pandemic highs, attracting premium brands seeking bargains. The discounts are helping companies renew their interest in the city after years of political protests and strict Covid measures crushed tourism, sent expats fleeing and shook Hong Kong’s reputation as a stable hub for business. Efforts to complete a long-shelved security law have also made a comeback.
Chanel has rented a two-floor store in the Causeway Bay shopping district for about HK$3 million a month — a price that’s likely a fraction of those borne by previous tenants. Christian Dior, part of fashion conglomerate LVMH, was expected to pay 36% lower than its former tenant for a shop in Central, local media reported last year. French luxury giant Hermes International SCA is expanding its store in one of Hong Kong’s highest-end shopping malls, also in Causeway Bay.
On saw its biggest-ever share price decline earlier this month after its sales growth forecast disappointed investors, and as it shifts from partnering with third-party retailers to expanding its network of company-owned stores.
Of 15 new locations it opened last year, 10 were in China, co-Chief Executive Officer Martin Hoffmann said in an earnings call this month. On is looking to add another 17 to 19 shops to its global network this year, co-CEO Marc Maurer added.
–With assistance from Shawna Kwan.
©2024 Bloomberg L.P.
