Chow Tai Fook Jewellery expects mainland market to remain weak

PUBLISHED : Friday, 11 January, 2013, 12:00am
UPDATED : Friday, 11 January, 2013, 3:56am

Chow Tai Fook Jewellery, the world's largest jewellery retailer, expects the mainland market to remain weak in the next few months after it reported an 8 per cent slump in same-store sales for the past quarter.

The company said yesterday revenue in the third quarter of the financial year grew 4 per cent. Revenue in Hong Kong and Macau rose 11 per cent, but the mainland market dropped 3 per cent as shoppers cut spending amid a slowing economy.

Same-store sales, a key measurement of single store performance, fell as much as 11 per cent on the mainland, while those of Hong Kong and Macau contracted 6 per cent.

The company said worse-than-expected sales during the National Day "golden week" in October dragged down overall sales significantly during the third quarter to December.

"The slowing economy has affected consumers' confidence. And the impact on mainland jewellery sales emerged around three to four months later than in Hong Kong and Macau," said Kent Wong Siu-kei, the managing director of the company.

The company earlier said mainland same-store sales from April to September grew 3.4 per cent, compared to a 6.3 per cent drop in Hong Kong, Macau and Taiwan.

"We have seen some improvements in the Hong Kong and Macau market. But it will take more time for the mainland market to rebound from the bottom," Wong said.

The company's finance director Hamilton Cheng Ping-hei said revenue growth during this quarter might remain similar to the past quarter.

Same-store sales in Hong Kong and Macau are expected to see "a low single-digit growth", while the mainland is likely to be negative.

Chow Tai Fook opened a net 70 shops or counters during the quarter, mostly on the mainland, bringing the number of outlets to 1,802 as of December. About 50 new shops would be opened next year, it said.

To boost sales and profit margins, the company will organise campaigns to promote gem-set jewellery to customers, whose appetite for gold products has been shrinking since last year.

Gold products accounted for 55 per cent of the total sales while gem-set jewellery took a 26 per cent share in the period under review.

Shares of Chow Tai Fook rose 1.6 per cent to close at HK$13 yesterday.