Strong Demand Drives Hong Kong Rebound at Chow Tai Fook

Sales at Chow Tai Fook fell slightly in the fourth fiscal quarter, even as increased demand in Hong Kong offset weakness in China.

“The fourth quarter unfolded amid heightened external uncertainties and unprecedented gold price levels and volatility, leading to mixed effects on purchasing behaviors,” the Hong Kong-based jeweler said last week. In Hong Kong and Macau, same-store sales grew…, driven by positive consumption sentiment and strong customer traffic.”

Overall, retail sales fell 1.5% year on year for the three months that ended March 31, reflecting an 8% drop in China, with a 59% jump in Hong Kong and Macau mostly offsetting that decline. Despite having its headquarters in Hong Kong, Chow Tai Fook derives most of its revenue from the mainland — 84% for the quarter.

However, the figures are an improvement over the same period last year, when sales slid 10% in China and 21% in Hong Kong.

Same-store sales in Hong Kong and Macau — at shops that had been open for a year — grew 40%. On the mainland, sales were up 0.2% by this measure, which excludes franchise stores.

Gold jewelry performed better than gem-set, or fixed-price, jewelry in both geographical segments, as consumers became more accustomed to the rising gold prices, the company explained. Same-store sales of gold jewelry climbed 47% in Hong Kong and Macau and advanced 7% in China, while gem-set grew 39% in Hong Kong and slipped 10% on the mainland.

During the fourth quarter, Chow Tai Fook launched two new products: CTF Accessories and CTF Home, commenting that the move “pushes the boundary of jewelry through continued innovation, enabling Chow Tai Fook to connect with customers across different lifestyle dimensions.”

The jeweler closed a net 124 underperforming locations in the period. It currently operates 5,689 stores.

Image: A Chow Tai Fook store in Hong Kong. (Shutterstock)