November 27, 2020

Hong Kong Still Attracting Retailers Despite Forbidding Costs

HONG KONG — Hong Kong is one of the busiest and most crowded shopping meccas in the world — with sky-high retail rents to match — but that has not stopped retailers from opening yet more stores in the city of seven million, attracted by hordes of visiting consumers.

The latest arrival is Tommy Bahama, a U.S. clothing and lifestyle brand, which joined the fray Wednesday with the opening of a 370-square-meter, or 4,000-square-foot, store in the Wan Chai district, its first outlet in the city.

Amid models and canapés, Tommy Bahama executives were coy about just how much they had to fork over in rent.

But the store, said Terry Pillow, the chief executive officer, is “one of the most expensive locations” the company operates — “in a similar range” as a recently opened, significantly larger, flagship store on Fifth Avenue in New York.

That comes as little surprise.

Reports from the real estate services company CBRE last year ranked Hong Kong as the world’s most expensive location for prime real estate and office rents, and ECA International, which advises companies posting employees abroad, published a poll this week showing that Hong Kong was the most expensive place to rent high-end apartments. The cost of buying a home, likewise, has soared, despite repeated efforts by the government to cool the market.

Moreover, even those companies that are prepared to bite the bullet on rent might struggle to find what they need.

It took Mr. Pillow and his colleagues at Tommy Bahama, whose casual wear is in the “affordable luxury” range of the market, four years to find a site they liked, in terms of store size and location.

They considered many of the high-end shopping malls, which are inhabited by all the usual suspects of the fashion world, but in the end, they settled on Wan Chai, a neighborhood that is better known for its bars and nightlife than for high-end shopping. But that fits with Tommy Bahama’s neighborhood-bar-type image, the company’s executives said.

“We were in a hurry to come to Hong Kong, but it was important for us to come to Hong Kong in the right way,” Mr. Pillow said.

So acute is the space-cost situation that analysts have begun to warn that Hong Kong has become too expensive for its own good.

Executives at CBRE in Hong Kong warned last October that the space constraints meant the city’s standing as a key location in Asia was “under threat.” Long waiting lists for spots in schools and high housing costs add to the financial pain and are increasingly causing companies to think twice about deploying expatriate employees or expanding teams in the city.

“Hong Kong has been losing out to Singapore in the past few years because of that,” Lee Quane, regional director for ECA International, said by telephone.

Similarly, in the retail sector, the lack and cost of suitable space has meant that some companies have taken relatively long to come to Hong Kong, industry analysts and real estate experts say.

Gap and American Eagle Outfitters, for example, opened shops in Hong Kong only in 2011. Forever 21, another popular U.S. brand, opened a large store in the bustling shopping district of Causeway Bay early last year, and Abercrombie Fitch’s flagship store, in the heart of Central, the financial district, opened last August.

The British brand Topshop, which is well established in other parts of Asia — it has eight shops each in Indonesia and Malaysia, six in Singapore and four in Japan — is opening its first store in Hong Kong this year, in May.

However, retail executives clearly believe that the expense of having a presence in Hong Kong is worth it.

After all, Hong Kong’s shopping population is vastly increased by the millions of tourists who flock to the city every month.

Last year, 48.6 million visitors came to Hong Kong, nearly three-quarters of them from mainland China, whose increasingly affluent consumers are eager to capitalize on the lower taxes in Hong Kong and greater certainty that what they are buying is the genuine article.

For retailers like Tommy Bahama, Louis Vuitton and Prada, Hong Kong is a necessary location, and a store in the city means visibility that extends well beyond the city, which is a special administrative region of China, into the vast mainland Chinese market.

“It’s a dog-eat-dog world out there,” said Rob Goldberg, senior vice-president for marketing at Tommy Bahama, referring to Hong Kong’s property and rental costs. “But if you can make it here, you’ll make it anywhere.”

Tommy Bahama executives said they were “very happy” with the performance of the Hong Kong store so far (The shop opened quietly two weeks ago but had its official ribbon-cutting event Wednesday.)

The company is looking for more locations in the city, as well as in mainland China.

Riva Hiranand contributed reporting.

Article source:

Start: An ‘Unsexy’ Start-Up Tries to Fill Movie Seats

From left: Kevin Hong and Sean Wycliffe, co-founders, aong with Renny Bestari, a former intern, and Evan Pham, business development manager.Courtesy of Dealflicks From left: Kevin Hong and Sean Wycliffe, co-founders, aong with Renny Bestari, a former intern, and Evan Pham, business development manager.


The adventure of new ventures.

Sean Wycliffe knew “The King’s Speech” had gotten rave reviews. So when he arrived at the theater about two years ago, he was surprised by what he saw. “It was a great movie, but the place was just empty,” he said. “It had 230 or 240 seats, but there was me and a couple and that was it.”

Mr. Wycliffe had just completed his bachelor’s degree in economics at the University of California, Berkeley. Midway through, he’d taken time off to start a small marketing firm with his brother. Now he hankered to build something new.

He found himself thinking about Hotwire and Priceline, the discount sites he’d used for several years to book hotel rooms that would otherwise go unoccupied. “What if we could partner with theaters and help them fill their seats in the same way?” he wondered. Moviegoers would pay for discounted tickets, specifying the film, the approximate time of day and the neighborhood. After completing a purchase, they would learn the exact showtime and theater.

Mr. Wycliffe incorporated Dealflicks last year. He started working full-time on the project in January along with two co-founders and they introduced a beta site in July.

Co-Founders: Mr. Wycliffe, 29, is the chief executive officer. Kevin Hong, 27, is the vice president of sales, and Zachary Cancio, 25, the chief technology officer.

Employees: Dealflicks has one full-time employee, a business development manager who started out as the company’s summer intern. Two more – a designer and a software engineer – are expected to come onboard soon.

Location: Dealflicks moved in October from Mr. Wycliffe’s Oakland apartment to Mountain View, Calif.

Pitch: “Dealflicks is like or, but for movie theaters,” Mr. Wycliffe said. “Right now about 88 percent of seats are empty on average. We partner with movie theaters and help them do marketing to fill these empty seats. Our deals are usually tickets – or tickets and popcorn, tickets and soda, that kind of thing – at up to 60 percent off.” From that discounted price, Dealflicks typically takes a 10-percent cut, though agreements vary by individual partners.

Traction: Dealflicks has contracted with 62 movie theaters so far. First to sign on was the Gardena Cinema in Los Angeles County. Mr. Hong wooed its Korean owners by bringing them his mother’s homemade pajun scallion pancakes.

While trying to build a primary base of theaters in the Bay Area, Dealflicks has also inked deals with partners in Arizona, Georgia, Massachusetts, New York, Ohio, Texas, Washington and Wisconsin.

This fall, Dealflicks won a slot in the accelerator run by 500 Startups, a seed fund and program for early-stage ventures created by Dave McClure, a former PayPal executive. The relationship developed after Mr. Wycliffe and his co-founders attended Unsexy, a conference for companies that are promising but unlikely to set pulses racing in Silicon Valley. At the conference, they talked to every 500 Startups alumni they could find.

“Then when walking out of an auditorium, we literally stumbled upon some dude coding on the floor. That dude turned out to be the C.T.O. of LivingSocial, Aaron Batalion,” Mr. Cancio wrote on his blog. “But neither Sean nor I realized who he was at the time. Like a scout, I surreptitiously looked at his name badge. I muttered a quiet suggestion to Sean and before I knew it, Sean marched up to Aaron and introduced himself.” That chance meeting wasn’t all it took to get into the accelerator — but it helped.

Revenue: So far, Dealflicks has sold a couple of hundred tickets, according to Mr. Wycliffe, who said total revenue has not yet passed the single-digit thousands. “But the growth is there,” he said. “This month, we’ve sold more than in the previous three months combined.” The company issued its first paychecks on Nov. 15.

Financing: Dealflicks has raised $115,000. Friends and family put in about $65,000. The remaining $50,000 came from 500 Startups. The company is seeking $250,000 in angel investments.

Marketing: The company holds parties at college campuses to get the word out. (“Dealflicks just hooked us up with a keg!!!” one Berkley student announced on the company’s Facebook page.) It also focused on search engine optimization, working to rank high in Google searches when users hunt for ticket deals. They’ve partnered with several larger sites that take a commission for driving sales their way. And they’ve also scored appearances on a couple of Bay Area television news affiliates.

Competition: and Fandango are the Goliaths of the online ticketing space. “They’re great but they’re different than what we do because they only sell full-price tickets, and they charge a convenience fee as well,” Mr. Wycliffe said. Entrants in the discount space are more of a wild card; five or six of them have come and gone in the last couple of years, he said. One contender, MoviePass, offers unlimited theater trips for a monthly fee. (In a sector that loves analogies, it aims to be the “Netflix of movie theaters.”)

Being “unsexy,” Mr. Wycliffe believes, “is kind of good in a way, because in Silicon Valley, everyone’s focused on that next, next thing. They’re looking at video on-demand and social networks. Most are not focused on the movie theater industry.”

Challenge: Can Dealflicks convince a critical mass of cinemaphiles to trade their ability to pick an exact time and theater for a cheaper ticket? Building the customer base is essential to attracting more theaters that, in turn, could attract more customers.

“Eventually, we’ll need to partner with some of the top chains to grow the business,” Mr. Wycliffe said. “For now, it’s about getting to the point where we have more and more theaters, and we’re filling up all of these empty seats.”

You can follow Jessica Bruder on Twitter.

Article source:

DealBook: Embattled Fortress Chief Takes Leave of Absence

Daniel H. Mudd, the former head of Fannie Mae, before a House panel in 2007.Mark Wilson/Getty ImagesDaniel H. Mudd testifying before a House panel in 2007, when he was head of Fannie Mae.

Daniel H. Mudd, who faces accusations that he misled investors while he was the top executive of Fannie Mae, is taking a leave of absence from his role as chief executive of the Fortress Investment Group, the company announced on Wednesday.

Last week, the Securities and Exchange Commission sued Mr. Mudd and five other former executives at Fannie Mae and Freddie Mac, the two mortgage-finance giants brought low by the housing bubble. In one of the most significant federal actions taken against crucial players in the mortgage crisis, the S.E.C. accused Mr. Mudd of playing down Fannie Mae’s exposure to risky loans.

Mr. Mudd and the other executives have vowed to challenge the accusations, noting that Fannie and Freddie routinely disclosed their exposure to risky loans in regulatory filings. Mr. Mudd has said that the suit is driven by politics, not substance.

But while he fights the S.E.C., Mr. Mudd has decided to step away from Fortress. It is unknown how long his leave of absence will last.

“I have requested a leave of absence from my position as chief executive officer to ensure that any time or attention I need to focus on matters outside of Fortress will not affect the business or operations of the company,” Mr. Mudd said in a statement.

Mr. Mudd started at Fortress in July 2009, after the government pushed him out of his role as the chief executive of Fannie Mae.

While Mr. Mudd has helped revive Fortress after its shares suffered a sharp decline, certain businesses have continued to struggle and the stock is trading at about $3.30. The firm has about $44 billion in assets under management in a variety of hedge funds, private equity funds and mutual funds.

He will be succeeded, at least temporarily, by Randal A. Nardone, who co-founded Fortress. Prior to starting Fortress, Mr. Nardone worked at UBS and BlackRock Financial. While Mr. Nardone does not have the public profile of Mr. Mudd, he is known for his deep knowledge of the private equity business, which is one Fortress’s main focuses.

“We are grateful to Dan for his service and leadership over the past two and a half years and support his decision to take a leave of absence at this point in time,” Mr. Nardone said in a statement. “We look forward to Dan’s return in the hope that matters are resolved favorably and expeditiously.”

Article source:

DealBook: Sunoco to Sell Refineries

Sunoco announced on Tuesday that it was exiting the refining business, in its latest move to refocus the oil company on retail and logistics operations.

The company has been shifting its strategy over the last couple of years. It sold its chemicals group, and earlier this year spun off its metallurgical coal production business, SunCoke Energy, in an initial public offering.

Now, Sunoco plans to sell off its refineries, and the process is already under way for two facilities in Pennsylvania. If the assets are not sold, Sunoco said it would “idle the main processing units” in July 2012.

The company expects to incur an impairment charge of $1.9 billion to $2.2 billion as a result of these efforts. After the sale, Sunoco said it could record a $2 billion gain related to the liquidation of some inventories.

With a sale of its refineries, Sunoco will be mainly focused on retail sales and logistics. The company has 4,900 gas stations in 24 states.

“We have made progress in increasing the efficiency of our refineries over the last several years, but given the unacceptable financial performance of these assets, it is clear that it is in the best interests of shareholders to exit this business and focus on our profitable retail and logistics businesses which have higher returns, growth potential, and provide steady, ratable cash flow,” Lynn L. Elsenhans, Sunoco’s chief executive officer, said in a statement.

Article source:

Stocks End Slightly Higher Despite Weak Economic News

The Labor Department said more people applied for unemployment benefits last week, the first increase in three weeks. The number of people seeking benefits rose by 10,000 to 424,000, more than analysts were expecting.

Applications are above the 375,000 level that is consistent with sustainable job growth. Applications peaked at 659,000 during the recession. Employers stepped up hiring this spring, but some economists worry that rising applications for unemployment benefits indicate hiring is slowing.

The Commerce Department said the economy grew at a sluggish 1.8 percent annual rate in the January-to-March quarter as surging gasoline prices and sharp cuts in government spending overshadowed strong corporate earnings. Consumer spending grew at just half the rate of the previous quarter, less than previously estimated. A surge in imports widened the United States trade deficit.

Economists believe the economy is doing only slightly better in the current April-to-June quarter. Consumers remain squeezed by gas prices near $4 a gallon and renewed threats from Europe’s debt crisis.

At the close of trading, the Dow Jones industrial average was up 8.10 points, or 0.07 percent. The Standard Poor 500-stock index was up 5.22 points, or 0.40 percent. The Nasdaq composite index was up 21.54 points, or 0.78 percent.

The weak economic news drew investors toward safer assets. The yield on the 10-year Treasury note fell to 3.11 percent, near its lowest level of the year. It was trading at 3.15 percent shortly before the economic reports came out. Bond yields fall when their prices rise.

Microsoft rose 2 percent after a hedge-fund manager called for the company’s board to replace its chief executive officer, Steven Ballmer. Tiffany jumped 8 percent after reporting that higher sales lifted earnings. Concerns about the European debt crisis continue to weigh on markets. Stocks fell for three days before Wednesday’s gains, which came as higher oil prices lifted energy stocks.

Greece’s government and opposition party failed late Tuesday to reach agreement on how to pare the country’s debts, adding to the uncertainty surrounding Greece’s financial future. Many analysts believe Greece will eventually have to restructure its debt, possibly by extending interest payments or lowering interest rates.

Analysts are also concerned about how much of an impact the supply disruptions stemming from the March earthquake and tsunami in Japan will have on manufacturing in the United States, especially on factories making cars and electronic products that depend on component parts from Japan.

Some analysts think Japan’s supply chain problems could shave as much as one-half a percentage point from growth in the April-to -June period.

Article source: