• Watson plans to open 1,400 stores, many of them in China
  • Chinese stores take less than year to recoup investments

Who says brick-and-mortar retail is dead? Billionaire Li Ka-shing’s A.S. Watson Group is opening nearly four stores a day because selling baby and skin-care products in China is generating profit margins that Amazon.com Inc. could only dream of.

The operator of the Watsons health-and-beauty stores and Superdrug chain plans to open 1,400 outlets globally this year, more than a third of which will be in China, Chief Operating Officer Malina Ngai said in an interview. Demand is so high in the mainland that the CK Hutchison Holdings Ltd. unit takes less than a year, on average, to earn back the investment it makes to open a store there, she said.

Watson’s expansion is in contrast to Marks & Spencer Group Plc’s decision to pull out of the country and the slowdown faced by luxury brands such as Louis Vuitton and Burberry in the world’s second-largest economy. Earnings at Watson’s China business…