CHINA’S largest jewellery retailer Chow Tai Fook Jewellery Group saw revenue plunge 20.4 per cent in the half year ended September, the biggest drop for the period since 2016 as the world’s No 2 economy slows and record high gold prices dent luxury spending.
Revenue for the group, the biggest listed arm of billionaire Henry Cheng’s business empire, was HK$39.4 billion (S$6.8 billion) for the period, the company said in a statement on Tuesday (Nov 26). Profit fell 44.4 per cent drop to HK$2.6 billion, mainly due to losses from revaluation of gold loan contracts amid volatile prices.
Operating profit, which reflects the jeweler’s core operational performance, was up 4 per cent to HK$6.8 billion. The group declared an interim dividend of HK$0.2 per share, compared with HK$0.25 a year before.
Chow Tai Fook also announced a plan to buy back up to HK$2 billion of shares from its internal resources to show its confidence in the long-term business prospect.
The jeweller is facing significant headwinds in mainland China, which accounts for more than 80 per cent of its revenue, with consumer confidence remaining weak amid plunging property prices and high unemployment rate.
Surging gold rices have further dented demand for the commodity. In Hong Kong, the group’s second largest market, slow tourism recovery – in both visitor arrivals and travel spending – also led to steep sales drop.
Same-store sales fell 25.4 per cent in self-operated shops in mainland China and 30.8 per cent in Hong Kong and Macau in the six months ended September. The company also reduced its sales network by 239 stores – mainly franchised ones – to cut cost and improve profitability.
Jointly led by Henry Cheng’s daughter Sonia Cheng, Chow Tai Fook and the family’s other two listed companies have been under increasing spotlight amid the family’s succession saga after the elder Cheng said he’s still looking for a heir. Sonia’s brother Adrian, who was widely seen as the strongest candidate, fell out of favour recently, stepping down as the chief executive officer of New World Development in September after the company became embroiled by heavy debt and losses. BLOOMBERG
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