Date
20 August 2017
Chow Tai Fook has seen a sharp fall in profit for the three months to June, partly due to a high base last year when low prices drove a gold rush. Photo: Bloomberg
Chow Tai Fook has seen a sharp fall in profit for the three months to June, partly due to a high base last year when low prices drove a gold rush. Photo: Bloomberg

Chow Tai Fook loses shine after 2013 gold rush

Chow Tai Fook Jewellery Group (01929.HK) suffered a 32 percent slide in sales in its fiscal first quarter to June, with the company attributing it to a high comparative base last year when there was a gold rush.

Overall same-store sales fell 40 percent in the three months to June, with those in Hong Kong and Macau witnessing a steeper 50 percent drop, the Hong Kong Economic Journal reported Thursday.

Analysts said the poor performance was within range and that they are actually more concerned about the trends of the company’s margins.

A sharp fall in price of the yellow metal sparked the so-called gold rush in the first half of last year, boosting sales of firms such as Chow Tai Fook.

The management expects better sales figures will come no sooner than the quarter ended December this year, as the effect of a high base last year extended through the end of July.

The company is looking to close some stores and reduce the size of some others in Hong Kong and Macau in the next three years, in a bid to enhance cost control and to improve gross profit margins, managing director Kent Wong Siu-kee said.

Wong, however, said the group’s plan on ensuring a net increase of 200 stores a year in mainland China will not change.

Chow Tai Fook has faced a 40 percent rise in rents in Hong Kong and Macau last year. It expects the increase this year will come in at below 30 percent.

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