December 2014 retail sales down 3.9% despite global jump in Chinese overseas spending

It's confirmed: buyers aren't splurging in Hong Kong.

Hong Kong retail sales in December 2014 were at HK$47.8 bn, down 3.9% y/y by value.

According to a research note from Barclays, this missed Bloomberg consensus estimate looking for +4.4% y/y growth.

December retail sales volume decreased by 1.3% y/y. The December trends were much weaker than November, which saw retail sales rebound to +4.2% growth.

The report noted that these trends in Hong Kong also contrast sharply with Global Blue data which showed that Chinese overseas spending was +49% y/y.

While Barclays believes the weakening of the euro might have played a role -- making shopping in Europe much more attractive to consumers -- these trends also continue to support our view that Chinese visitor spending continues to diverge to other travel destinations outside of Hong Kong.

Here's more from Barclays:

During December, while visitor spending driven categories slowed, there was also mild slowdown in categories more driven by local consumption (such as food, durables, supermarkets, etc).

FY2014 retail sales flat y/y: The full-year retail sales in Hong Kong came in at HK$493 bn, down 0.2% y/y by value. This compares to 2013 that saw 11% y/y growth in retail value.

Weakening spending power of visitor arrivals: December still saw mainland Chinese visitor arrivals grow at 13% y/y, continued growth following October and November’s +18% and +24% y/y growth respectively. We believe this potentially means the spending power of visitor arrivals coming to Hong Kong has been getting weaker. For December, same-day visitor arrivals grew by 18% y/y and overnight visitors grew by 7% y/y only.

Major categories:

Jewellery and watches saw wider decline at 16.3% y/y in December: This is much wider than the 2.1% decline seen in November.

Clothing and footwear sales continued to see 3.7% y/y decline in December: This is slightly wider than the 2.9% y/y decline seen in November.

Department stores sales down 5.3% y/y drop in December: This is a reversal compared to the +6.0% y/y growth in November.

Medicines and cosmetics growth slowed down to 4.2% y/y in December: This is compared to the 10.3% y/y growth seen in November.

Food, alcohol and tobacco and consumer durables sales continue to see growth; growth slowed slightly: Sales growth for food alcohol and tobacco slightly slowed to 7.4% y/y, compared to the 10.3% y/y growth seen in November. Consumer durables sales also slowed down to +4.1% y/y in December, following the 14.2% y/y growth in November.