Parkson Retail Plummets as China Sales Growth Slows

Jan. 7 -- Parkson Retail Group Ltd., the Beijing-based department store chain, fell the most in a year on the Hong Kong stock exchange as China sales growth slowed.

The stock fell HK$1.25, or 14 percent, to HK$7.73 at the midday break in Hong Kong, set for the largest drop since Jan. 21, 2008. In Malaysia, Parkson Holdings Bhd., the Kuala Lumpur-listed holding company, lost 9.4 percent, the most since October.

The group yesterday said fourth-quarter growth in Chinese stores open at least 12 months cooled to between 7 percent and 8 percent, compared with a 12 percent rise for the year. Parkson cited the slowing trading environment in China, where it runs 40 stores. Recessions around the globe are cutting demand for Chinese products, prompting job cuts and factory closures.

“The result is a lot worse than expected,” Keith Li, a retail analyst at CIMB-GK Securities (HK) Ltd., said by phone from Hong Kong. “We will see growth momentum slow down for more retailers in China.”

Parkson, controlled by Malaysia’s Lion Group, blamed a “deterioration of the trading environment” in China’s export- driven coastal region. The company said in November that it planned “aggressive” promotions to encourage consumer spending along the coast.

Parkson Retail’s Hong Kong-listed stock was the biggest decliner on the MSCI Asia Pacific Index today. More than 21.1 million Parkson Retail shares changed hands in Hong Kong, almost triple the average daily total in the past six months.

DBS Group Research cut its rating on Parkson Holdings to “fully valued” from “buy.” Still, DBS said in a report that the company’s medium- to long-term prospects are “favorable” as consumer spending in China, Vietnam and Malaysia will grow.

Parkson Holdings dropped 40 sen to 3.88 ringgit in Kuala Lumpur trading at the 12:30 p.m. break.

(Bloomberg)

M&S to open first mainland China store

LONDON, Sept 25 - Marks & Spencer will open its first store in mainland China on Oct. 2, the same day as a keenly-awaited trading update, in the latest move by an international retailer into the world's most populous country.

The British clothing, food and homewares group said the 45,000-square-feet store on Nanjing Road West, Shanghai's premier shopping street, would be its biggest so far in Asia.

The opening underscores Chairman Stuart Rose's determination to take Marks and Spencer (M&S) back onto the international stage, despite growing problems at home.

Global retailers like U.S. group Wal-Mart and France's Carrefour have flocked to China in a bid to tap into its surging economic growth and growing middle class.

Expansion has not been without problems. Richemont, the world's second-biggest luxury goods group, and Kingfisher , Europe's biggest home improvements retailer, have both closed stores after rapid growth and stiff competition.

But M&S already has experience of mainland Chinese shoppers, as many travel to its nine stores in Hong Kong.

Formerly occupied by the Wings department store, the Shanghai site has been given a complete makeover and will sell M&S's traditional mix of women's, men's and children's clothes, as well as homewares and food, over four floors.

Like its Hong Kong stores, the Shanghai outlet is wholly-owned by the company. M&S has not said when or where it plans to open more shops in mainland China. However, it is due to open another one in Hong Kong in the near future.

M&S first began expanding outside the UK back in the 1970s. But it retrenched earlier this decade, selling its operations in the United States and closing down company-owned stores in western Europe to focus on boosting sales at home.

(Reuters)