Chow Tai Fook Boosted by China Expansion

RAPAPORT… Chow Tai Fook sales surged in the fiscal first half as the company added a net 624 new locations in mainland China.

Retail sales value across the group soared 79% year on year to HKD 44.19 billion ($5.67 billion) during the six months ending September 30, the Hong Kong-based jeweler reported Tuesday.

Revenue was also boosted by strong demand for gold, an improvement in local consumption in Hong Kong, and recovering tourist spending in Macau, the company noted.

Same-store sales — at branches that were open during the same period last year — rose 32% in China, and leaped 80% in Hong Kong and Macau.

“We are optimistic about the macro-development of the mainland and the prospects of the jewelry industry,” said Chow Tai Fook chairman Henry Cheng. “Our mainland store expansion is steadily unfolding. Going forward, the mainland China market remains the core part of the group’s retail-expansion strategy, and we shall push forward to capture more market share.”

However, the company believes growth will slow in the second half due to a relatively high base comparison with the previous year. During the start of the third fiscal quarter, from October 1 to November 18, retail sales value across the group rose 33%. The figure grew 42% in China but fell 17% in Hong Kong, Macau and other markets. The easing of restrictions on travel to Hong Kong is not likely to aid sales in the second half, Chow Tai Fook explained.

“Even if Hong Kong’s major border crossings reopen, we expect the number of tourists may not improve significantly in the short term,” Cheng added.

Correction, November 24, 2021: This story has been corrected to say that the results are for the fiscal first half and not the second fiscal quarter.

Image: A Chow Tai Fook store in Hefei, China. (Chow Tai Fook)