(Bloomberg) -- Hong Kong’s billionaire-owned conglomerates are feeling the pinch from residents making millions of trips to mainland China to wine, dine and shop.

CK Hutchison Holdings Ltd., which on Thursday reported its steepest drop in profit since 2015, is re-thinking consumer offerings as its retail businesses in Hong Kong face pressure from the outflow of residents. The group, part of billionaire Li Ka-shing’s sprawling empire, is now adding more health-related products in shops located in tourist-heavy districts to attract mainland Chinese shoppers, deputy managing director Dominic Lai said at a briefing. 

It’s also sourcing more products for its supermarkets from across the world, including mainland China, he said. CK Hutchison’s retail business spans supermarkets to A. S. Watson, the world’s largest international health and beauty retailer. 

“Inevitably, many residents heading north to shop in nearby cities have affected their consumption sentiment in Hong Kong,” Lai said. “Our group’s retail business in Hong Kong has also felt the pressure.”

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CK Hutchison is among several Hong Kong tycoon family groups — including Jardine Matheson Holdings Ltd. and Henderson Land Development Co. — whose local retail outlets and restaurants have been hammered by a record number of residents heading across the border to take advantage of a booming array of entertainment and dining options at low prices. That’s come alongside a broader exodus of expats and local professionals following the 2019 protests and years of strict Covid curbs, leaving the city struggling to maintain its reputation as an international financial hub.

Still, CK Hutchison’s retail division reported a 13% increase in earnings before interest, taxes, depreciation and amortization last year, mainly due to favorable performances in Europe and other parts of Asia, Chairman Victor Li said in a statement Thursday.

The majority of operations in those divisions have already exceeded pre-pandemic levels and should continue to deliver solid results this year, while mainland China and Hong Kong are expected to improve through network optimization and other initiatives, he said. 

Henderson, whose underlying net income missed analyst estimates on Thursday, saw profits for its department stores and supermarkets plunge 42% from the year before. 

The segment, which contributes about 6% of the group’s revenue, is grappling with dropping customer demand for food and daily necessities after Covid, as well as increasing outbound travel and cross-border shopping, the company said in a statement.

Jardine, whose DFI Retail Group Holdings Ltd. operates Hong Kong’s largest supermarket chain Wellcome and health-and-beauty retailer Mannings, saw underlying profit for its grocery division halved last year. “The rising frequency of travel from Hong Kong residents into the Chinese mainland is now impacting shopping behavior, particularly during weekends,” DFI said in an earnings statement earlier this month. 

The movement of consumers to the mainland is also affecting eateries. Jardine Restaurants, which operates Pizza Hut and KFC in Hong Kong, incurred a loss in 2023, compared with a profit the year before, the group said in an earnings statement. Both fast-food chains reported losses for the year, the company said. 

DFI executives told analysts in a briefing that the firm plans to offer more competitively priced health products and other items to lure customers back. 

Even state-owned conglomerate China Resources Holdings Co. closed half of its Hong Kong supermarket chain U Select outlets because of rising competition from nearby mainland Chinese cities, including Shenzhen. Dah Chong Hong Holdings Ltd., the city’s biggest food and fast-moving consumer goods distributor, announced earlier this month it was shutting its 28 retail stores. 

(Updates to add company earnings and background throughout)

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