Sales fell at Chow Tai Fook in the fourth fiscal quarter as high gold prices and an increase in outbound tourism hit consumer demand.
“During the fourth quarter, macroeconomic externalities and high gold prices continued to weigh on consumer sentiment,” the Hong Kong-based jewelry retailer said last week. “In Hong Kong and Macau, the market continued to be affected by the local outbound travel and the change in spending patterns and preferences among mainland tourists.”
Retail sales fell 12% for the three months that ended March 31, reflecting a 10% drop in China and a 21% drop in other markets, the jeweler reported. Despite being headquartered in Hong Kong, Chow Tai Fook derives most of its revenue from the mainland — around 90% for the quarter.
Even amid the downturn, Chow Tai Fook noted that sales of diamond products had improved in China, with the decline narrowing considerably.
Same-store sales in Hong Kong and Macau — at shops that had been open for a year — fell 23%. On the mainland, sales slipped 13% by this measure, which excludes franchise stores. A higher number of people from the municipality shopping abroad contributed heavily to the drop in Hong Kong and Macau. A change in spending patterns from mainland tourists who usually visit Hong Kong to purchase luxury goods also affected sales.
Gem-set jewelry performed better than gold in both geographical segments, down 5% in Hong Kong and 12% in China. Gold jewelry fell 26% in the municipality and 14% on the mainland.
Image: A Chow Tai Fook store in Hong Kong. (Shutterstock)
