Chow Tai Fook Sees Dim Hong Kong Outlook

RAPAPORT… Chow Tai Fook expects sales in Hong Kong to remain weak after reporting a sharp slump in revenue and profit due to the coronavirus.

Consumer demand was slow in the municipality in April and May as tourists stayed away, contrasting with a slight recovery in mainland China following the relaxation of lockdowns.

“In Hong Kong and Macau, the market will remain challenging in the foreseeable future,” Chow Tai Fook noted. “As the customer base has been reshaped, we shall continue to consolidate our retail network, rationalize [our] cost structure and refine our business strategies.”

Group revenue fell 15% to HKD 56.75 billion ($7.32 billion) in the fiscal year ending March 31, reflecting the Covid-19 pandemic in the final quarter, as well as the impact of higher gold prices and protests in Hong Kong. Profit dropped 36% to HKD 2.98 billion ($384.9 million), the retailer reported Thursday.

Sales fell 4% to HKD 40.76 billion ($5.26 billion) in mainland China, and slid 34% to HKD 18.1 billion ($2.33 billion) in Hong Kong, Macau and other markets.

During the period between April 1 and May 31, retail sales — excluding franchises — plummeted 71% year on year in Hong Kong, Macau and other locations outside mainland China. Retail sales on the mainland dropped 3% for the same two months.

The coronavirus outbreak forced the company to shut stores across the region, with most of them reopening during April, it explained.

However, the recovery in mainland China was modest, with the retailer missing out on the sharp rebounds that other brands saw. Earlier this week, Tiffany & Co. reported a 30% year-on-year rise in retail sales in mainland China in April, and a 90% jump in May.

Arrivals from mainland China, an important source of revenue for the Hong Kong luxury market, plummeted 99.9% to 2,947 in April, according to the latest figures from the city’s tourist board. Total tourist numbers from all locations fell by the same percentage to 4,125 for the month.


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