Across The Border | Hong Kong jewellery retailers yet to hit bottom
Analysts say rebound unlikely, even with a rise in price of gold
The worst is yet to come for Hong Kong jewellery retailers, according to analysts, as fewer tourists visit the city and demand shrinks in mainland China, and even a surge in the price of gold is unlikely to help.
“We do not expect a quick rebound in the jewellery market,” Jefferies said in a research report, after Hong Kong’s jewellery giant Chow Tai Fook reported 26 per cent year-on-year fall in same stores sales for the three months to the end of March, the fourth quarter of its 2016 financial year.
Same store gold jewellery sales plummeted 27 per cent, even though the price of gold jumped 19 per cent amid rising risk-averse sentiment globally.
Another jewellery retailer, Luk Fook, saw overall same store sales decline 27 per cent during the same period, compared with a 25 per cent drop in the previous quarter. Its gold jewellery sales plunged 28 per cent.
Jefferies said it expected Chow Tai Fook’s revenue would fall 7.8 per cent year on year to HK$59.2 billion for the past financial year, with net profit plunging 38.9 per cent to HK$3.3 billion.
CLSA estimated Chow Tai Fook’s revenue would fall 6.6 per cent to HK$60.06 billion and would dip a further 2.5 per cent in the current financial year.