Chow Sang Sang Turns Focus to China

RAPAPORT… Jeweler Chow Sang Sang will open more than 40 new stores in China by the end of the year, while closing a number of locations in Hong Kong.

“Despite all the uncertainties brought on by the pandemic and geopolitical strife, we are optimistic about the China market with its huge middle class,” the Hong-Kong based company said last week. As such, “we will continue to build our store network in China.”

Hong Kong, however, is in a more difficult situation due to a lack of tourism, the jeweler continued. “Because of the precipitous change in the customer base from a visitor-dominant mode to one of local consumption, we plan to close some weak-performing stores.”

The company’s total sales for the first half decreased 33% year on year to HKD 6.42 billion ($828.1 million), with profit plunging 66% to HKD 211.4 million ($27.3 million). In the jewelry-retail segment, revenue dropped 36% to HKD 5.65 billion ($729.1 million) for the six months ending June 30; the group’s other revenue comes from businesses such as wholesaling and real estate.

Jewelry sales in China slid 29% to HKD 3.68 billion ($475.2 million), while those in Hong Kong declined 46% to HKD 1.91 billion ($246 million).

The drop in China occurred while stores were mostly shut during February and March to stem the spread of the pandemic. However, the mainland figures began to recover once stores reopened at the end of March, and by June, they amounted to approximately 95% of the previous year’s sales for that period, Chow Sang Sang reported.

However, “the same cannot be said for Hong Kong and Macau,” it went on. While most locations in Hong Kong remained open (with reduced hours) throughout the pandemic, sales there have not recovered, “as mainland visitors, who accounted for some 50% of sales in the past, have not reappeared.”

Image: A Chow Sang Sang store in Shanghai, China. (Chow Sang Sang)