Food, alcohol, tobacco sales grew 22.8% y/y in September

Mid-Autumn festival is the possible growth driver.

It has been noted that sales for food alcohol and tobacco grew a strong 22.8% y/y after the 10.3% y/y decline in August.

According to a research note from Barclays, this could be due to both the timing of the Mid-Autumn festival in late September this year and the low base of last year.

But consumer durables sales fell 5.7% y/y.

Hong Kong retail sales in September continue to weaken, totalling HK$35.2bn, down 6.4% y/y by value. This was weaker than the 5.3% y/y decline in August and the 2.9% y/y decline in July; and was also below the Bloomberg estimate of a 5.4% y/y decline.

Here’s more from Barclays:

September retail sales volume fell 3.1% y/y, wider than the 0.1% y/y decline seen in August. The growth trend for consumer durables reversed and moved into the negative territory, while the decline in the jewellery/watches segment widened. On the other hand, the food, alcohol and tobacco segments saw strong growth, which could be due to the timing of the Mid-Autumn festival at late September this year and also due to the low base of last year.

Visitor arrivals from mainland China down 5% y/y in September, narrowed from the 7%/10% y/y declines in August/July. Visitors under the Individual Visitor Scheme continued to decline, down 14% y/y, though narrower than the 18% y/y decline seen in August. The number of same-day visitors fell 6% y/y while the number of overnight visitors dropped 2% y/y.

We remain negative on the Hong Kong retail environment. We anticipate slow sales growth in Hong Kong over the next few years as: 1) we expect the higher-spending visitors to continue to travel to other destinations, particularly where currencies have depreciated ; and 2) we believe Hong Kong’s product pricing advantage could diminish if the USD stays strong and if China removes more import tariffs or consumption taxes for more goods.

September sales performance by major categories: Jewellery and watches sales decline widened to 22.9% y/y: This was far worse than the 8.8% decline in August. Meanwhile, department stores sales fell 5.1% y/y: This was an improvement from the 8.6% y/y decline in August. Clothing and footwear sales dropped 11.6% y/y: This was at similar levels to the 11.3% y/y decline in August. Meanwhile, medicines and cosmetics sales declined by 0.6% y/y in September: A narrower decline from the 5.2% y/y decline in August.