Chow Tai Fook Sales Slump
October 17, 2019
RAPAPORT... Hong Kong-based jeweler Chow Tai Fook has reported a downward trend in sales across both mainland China and Hong Kong in the second fiscal quarter.
Same-store sales of gold products — at branches open for at least 12 months — fell 15% year on year in mainland China for the period ending September 30, and 49% in Hong Kong, the company said Tuesday. Same-store sales of gem-set jewelry also slumped, plunging 35% in Hong Kong, while remaining flat for the mainland.
Overall same-store sales declined 7% in the mainland compared to the same period last year, and by 42% in Hong Kong.
The “uncertain macro environment” and a global rise in gold prices affected sales during the quarter, the retailer explained. The circumstances in Hong Kong and an unfavorable comparison with last year also impacted performance in the municipality, it added.
Pro-democracy protests in Hong Kong have hurt local retail businesses since June, with September seeing the steepest monthly decline in sales of jewelry, watches, clocks and other valuable gifts since records began, according to government data.
“Despite the US-China trade conflicts and situation in Hong Kong, the group remains positive on the fundamentals of mainland China, and believes that the group will continue to be fueled by the steady growth of its mainland China segment,” Chow Tai Fook said.
In a separate warning, also issued Tuesday, Chow Tai Fook said it expected its net profit for the first fiscal half to suffer due to an “unrealized loss” — a decline in the value of an as-yet unsold asset — of HKD 800 million to HKD 1 billion ($102 million to $127.5 million). That loss resulted from the gold-price surge, it noted.
The retailer will publish its interim results for the six-month period by the end of November.
Image: A Chow Tai Fook store in Hong Kong. (Macokeninealsm)
Article originally published on Diamonds.net here