The Fubon Group (富邦集團) will sell its department store business to upscale mall operator Breeze Center (微風廣場) as the retailing business is affected by the nation’s lackluster economic growth, the company said yesterday.
The planned termination of the three-year-old Momo Department Store (Momo 百貨) on Nanjing E Road in Taipei also reflects the increasingly fierce competition in this line of business in Taiwan, the Fubon Multimedia Technology Co (富邦媒體科技), a subsidiary of the group, said in a statement yesterday.
“The company’s board has approved the end of its department store operations, which is expected to be taken over by the Breeze Center in coming days,” Fubon Multimedia said in the statement.
Besides Fubon group, other shareholders in the company include South Korean retail giant Lotte Shopping Co and Taiwan’s Teco Group (東元集團).
The company did not provide detailed financial terms nor the exact timeframe for the business to be handed over to Breeze. Domestic retailers are facing an increasingly difficult environment amid a weakening economy, which has caused consumers to be reluctant to spend.
In the first half of the year, total department store sales grew only 0.9 percent to NT$130.9 billion (US$4.38 billion), the Ministry of Economic Affairs said last month. Fubon Multimedia, which also operates the Momo TV shopping channel and online shopping Web site, as well as Momo personal care and drugstore chain, said competition is becoming more severe among department store operators in Taiwan, where major players have expanded the scale of their business and are using the franchise model in order to stay competitive. “The smaller-scale Momo Department Store has also faced weakening profitability because of suppressed consumer spending in recent years,” the company’s chairman Howard Lin (林福星) said in the statement.
Following the closure of its physical department store outlets, the company will reallocate company resources into its virtual retail channels and aims to build a global platform in the future, Lin said.
The company’s retail business reported NT$18.7 billion in sales last year, up 19.87 percent from NT$15.6 billion in 2011. Sales for this year are expected to exceed NT$20 billion mark, according to the company.