Chow Tai Fook Quarterly Retail Sales Fall 6% on Hong Kong
Same-store sales fell by 7 percent in mainland China, and were down 24 percent in Hong Kong and Macau in the fiscal first quarter ending June, the jeweler said in a statement.
Chow Tai Fook Jewellery Group Ltd., the world’s largest listed jewelry chain by sales, saw the value of its retail sales fell 6 percent in April to June due to weak sales in Hong Kong and Macau, according to Bloomberg. Same-store sales fell by 7 percent in mainland China, and were down 24 percent in Hong Kong and Macau in the fiscal first quarter ending June, the jeweler said in a statement.
Hong Kong-based Chow Tai Fook has been hurt by China’s slowing economic and a government-led austerity campaign, which prompted shoppers to cut back on luxury purchases. The jeweler saw net income plunge 25 percent for its fiscal year ending March as stores in mainland China, Hong Kong and Macau suffered. The jeweler had cut prices for some of its diamond-set products by as much as 30 percent in June, in a bid to reduce inventories bloated by weaker-than-expected sales in the city, said Bloomberg Intelligence retail analyst Catherine Lim. Last June the company announced the 2015 annual results.
The decline in revenue in FY2015 was attributable to the exceptionally high base effect as a result of the gold rush in FY2014 and a weak consumer sentiment, especially in Hong Kong and Macau market, during the second half of FY2015.
As demand for gold products became normalised gradually on the one hand, the Group was able to capture the growing potential of gem-set jewellery products on the other to improve the product mix remarkably. Thanks to the stable volume growth of gem-set jewellery which enjoys a higher margin, the Group saw an increase in gross profit margin in FY2015.
Speaking of the Group’s annual results, Chairman Dr. Henry Cheng said, “In spite of the headwind in FY2015, continuous urbanisation and a growing middle-class have us convinced that growth opportunities still abound in Mainland China, and the Group will continue to focus on Greater China while maintaining our leadership position throughout the region. We will continue with our efforts in different areas of our business to further the distinctive strengths of the Chow Tai Fook brand. Integrating our online and offline channels, leveraging technology to introduce brand new experiences for our customers, rewarding our most loyal customers and, last but not least, maximising our operational efficiency are our guiding principles.”
Despite the challenges ahead, the Group remains cautiously optimistic about the outlook of FY2016. While business momentum in Hong Kong and Macau will be slow amid the macro headwinds, the Mainland China market is anticipated to see a faster recovery as the wealth effect brought forth by the booming capital market is expected to benefit the jewellery industry. In the long run, the Group is positive about the jewellery market growth in Greater China.
In support of the Group’s sustainable development, the Group will continue to penetrate into Tier II and lower tier cities leveraging more on franchisees’ local knowledge and network. While in Hong Kong and Macau, a flexible approach in POS opening and consolidation will continue for optimising store productivity and efficiency. The Group is also open to opportunities in other Asia markets riding on the fast growing trend of overseas travel of Mainland Chinese tourists. The Group strives to develop omni-channel retailing to offer seamless shopping experience to customers. To build HOF’s presence in Greater China, the Group strategically opens HOF standalone stores in prime locations in Tier I and Tier II cities in Mainland China for image building while opening “shop-in-shop” and “counter-in-shop” simultaneously leveraging Chow Tai Fook’s extensive retail network and customer base.
