Chow Tai Fook Revenue Tumbles Due to Virus

RAPAPORT… Chow Tai Fook’s sales slid in the fourth fiscal quarter amid sluggish consumer demand and store closures brought on by the coronavirus pandemic.

Retail sales slumped 41% in mainland China in the three months ending March 31, while same-store sales — at branches open for at least year — plunged 50%, the jeweler reported last week. Both retail sales and same-store sales in Hong Kong and Macau plummeted 65% during the period. Same-store sales only include shops that Chow Tai Fook operates itself, as opposed to franchises.

Gold jewelry sales fell 54% on a same-store basis on the mainland and 67% in Hong Kong and Macau. The decrease was caused by heavy volatility in the price of gold combined with a slowdown in spending due to the spread of COVID-19, the company noted.

Same-store sales of gem-set jewelry dropped 64% in Hong Kong and Macau and 50% in mainland China.

During the period, the pandemic forced Chow Tai Fook to suspend operations at more than 40 locations in Hong Kong and Macau, and at 80% of those in China. The remaining stores were operating with shortened hours. The company has since reopened locations, with around 70% of its points of sale in mainland China and 64% in Hong Kong and Macau operational as of February 29.

The company expects group revenue to fall 11% to 13% for the year, while profit will drop 7% to 9% according to unaudited reports for the 11 months ending February 29, it said. Inventory as of February 29 was 15% higher than the same period a year ago.

Chow Tai Fook opened a net 65 outlets in mainland China and closed four in Hong Kong during the January-to-March period. The retailer operated 3,850 locations at the end of the quarter, including the Enzo chain, which it purchased in January.


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