Chow Tai Fook operating profit crashes 27 per cent in latest half-year results
The stock has lost some 43 per cent of its value so far this year
Amid softening tourist traffic in Hong Kong and the mainland’s anti-corruption campaign,
Hong Kong-headquartered jeweller Chow Tai Fook reported on Tuesday its operating profit crashed 27 per cent in the first six months of its financial year, to the end of September, compared with the same period last year.
Its mainland watch business was particularly hard hit, reporting a HK$78 million loss and 12.5 per cent contraction in sales revenue for the period.
In Hong Kong, Chow Tai Fook’s customer traffic was down by 31.2 per cent and sales revenues were down 6.9 per cent.
Retail sales, which make up some 85.4 per cent of the group’s total income, were down across the board – on the mainland, in Hong Kong and Macau and in other locations.
Investors reacted indifferently to the group’s latest results. Chow Tai Fook stock tumbled from a high of HK$5.91 before its announcement at 3.20pm to HK$5.88 at the market close. The stock has lost some 43 per cent of its value so far this year.
The jeweller listed four years ago, and its stock is now worth just 39 per cent of its HK$15 listing price.
The group is looking into looking to new means to diversify revenue. It said it would focus on research and development for new jewellery. It has a shopping complex soon to open in Qianhai, the special economic zone in Shenzhen, in association with New World Development, and said it would look to further its e-commerce business there.
“In the face of the changing consumer preference and uncertainties underlining the current market environment, we remain focused in boosting the productivity of our points of sale while taking a pragmatic approach to explore new sales channels as opportunities come,” Chow Tai Fook’s management said.
It has closed down 10 sales locations but still runs 2,286 across the mainland, Hong Kong and Macau.