Source:
https://scmp.com/business/companies/article/1474736/chow-tai-fook-loses-lustre-amid-poor-sales-hong-kong-and-macau
Business/ Companies

Chow Tai Fook loses lustre amid poor sales in Hong Kong and Macau

Investors cautious on the jeweller's outlook as demand from HK and Macau weakens

BLOOM

Updated: 12:59am, 11 Apr, 2014

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Sales at the Chow Tai Fook's Hong Kong and Macau stores open for at least 12 months declined 9 per cent from a year earlier as fewer customers visited the shops.

Chow Tai Fook Jewellery, the world's largest jewellery chain, yesterday fell the most in almost two years as lower demand from Hong Kong and Macau weighed on same-store sales in the fourth quarter.

The shares dropped as much as 7 per cent before closing the session 5.58 per cent down at HK$11.84.

Sales at the jeweller's Hong Kong and Macau stores open for at least 12 months declined 9 per cent from a year earlier as fewer customers visited the shops, Chow Tai Fook said on Wednesday. That compared with 7 per cent growth in the previous quarter. Group sales gained 22 per cent, slowing from a 26 per cent increase.

Total same-store sales rose 4 per cent, slowing from 11 per cent in the third quarter and 15 per cent over the Lunar New Year period.

Same-store sales on the mainland jumped 15 per cent, up from a 14 per cent gain in the previous three months, according to the seller of gems and gold chains.

A surge in demand last year due to falling gold prices and current softening demand in Hong Kong and Macau would make future sales comparisons challenging, Gloria Tsuen, an analyst at HK Capital Markets, wrote in a report yesterday.

"Longer term, we continue to like the secular growth of China's jewellery industry and Chow Tai Fook's leading brand and strong positioning there, but will await the passing of near-term headwinds," she said.

Tsuen reduced her estimate for the company's sales this year by 4 per cent and cut her recommendation on the stock to "hold" from "buy".