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Tag: Chow Tai Fook

  • E-Commerce Latecomer Chow Tai Fook to Chase Online Giant Alibaba

    E-Commerce Latecomer Chow Tai Fook to Chase Online Giant Alibaba

    The Chow Tai Fook brand took almost 90 years to become a family empire spanning Hong Kong shopping centers, the world’s largest jewelry chain and casinos to give patriarch Cheng Yu-tung a $10 billion net worth. Alibaba Group Holding Ltd.’s founder Jack Ma needed less than five years to amass an e-commerce fortune almost triple that.

    Now, the Cheng family’s holding company is making a move to chase Alibaba and other Internet retailers by expanding its online presence. It invested 350 million yuan ($54 million) in shopping platform CTFHOKO.com in December and a mall to showcase products sold online. Its website offers genuine imports such as infant formula, diapers and cosmetics at prices at least 10 percent cheaper than shops in mainland China and is aimed at consumers wary of counterfeit goods online.

    The company is banking on its decades-old reputation. While Hong Kong-based Chow Tai Fook has little e-commerce experience compared with JD.com Inc. and Alibaba’s Tmall, it “can offer confidence in product quality while some existing websites may have fake products,” said Chan Sai-cheong, executive director of Chow Tai Fook’s jewelry unit in charge of the venture.

    Cheng family’s flagship Chow Tai Fook Jewellery Group Ltd. joins other retailers in stepping up its online business that has long been dominated by Alibaba and other e-commerce companies. It’s also seen its traditional business suffer its worst year since 2011 as China’s slowing economy and anti-graft campaigns curb demand for luxury goods.

    The prize is a $100 billion-a-year online Chinese market for imports such as cookies and diapers, according to a report by Mintel Group Ltd., as consumers remain concerned about local products after a series of scandals over fake goods. China’s e-commerce industry is dominated by Alibaba and JD.com, with market shares of 52 percent and 20 percent respectively, according to the report.

    “It’s unlikely for newcomers to compete for website visitation” because China’s most popular online platforms such as Alibaba attracts the most traffic, said Ray Zhao, an analyst at Guotai Junan Securities Co. “It has to cooperate with China’s Internet companies to let Chinese consumers know there is a new website.”

    The hurdle for Chow Tai Fook is not just homegrown. Amazon.com Inc., the world’s largest e-commerce company, is also putting together a plan to take on Alibaba as it vies to capture China’s growing cross-border e-commerce market, which by 2020 is expected to swell into a $1 trillion industry serving 900 million shoppers, according to a June report from Accenture and AliResearch, Alibaba’s research arm.

    No Partnership

    While other brick-and-mortar companies have paired up with established platforms to break into China’s online market, such as the partnership between LVMH-owned cosmetics retailer Sephora and JD.com as well as department store chain Intime Retail Group Co.’s venture with Alibaba, Chow Tai Fook is prepared to go at it alone.

    “We don’t need to have any partnership in expanding the business — we are strong enough to do it by ourselves,” Chan said in an interview in his Hong Kong office. “What we care is that the business model has potential to grow.”

    Cosmetics, Cakes

    To complement its online offerings, Chow Tai Fook built a companion shopping mall in the Qianhai free trade zone in the southern city of Shenzhen to exhibit products sold online, while some are also for sale at the stores.

    Since the first phase of the three-story mall opened in December, Chow Tai Fook has invited 21 Hong Kong retail brands such as cosmetics retailer Sa Sa International Holdings Ltd. and Maxim’s Cakes to display their wares there and sell on its website. At least another 50 retailers will open outlets at the mall when its next phase is ready in May, said Chan.

    All products in the CTF HOKO mall and sold on its sister website are shipped from Hong Kong or other countries outside China, and prices for products such as cosmetics, milk powder and diapers are cheaper than at shops. That’s because the government has adopted lower taxes for online retailers that import through specific ports, under a program labeled “cross border e-commerce.”

    Chow Tai Fook isn’t the only traditional retailer to try and benefit from the program. China Resources Holdings Co. started ewj.com last July and opened a companion showroom in Shenzhen, while Wal-Mart Stores Inc. also plans to introduce a cross-border e-commerce service this year.

    Imported products for infants have been the most popular category since Chow Tai Fook opened its platform, as “Chinese parents don’t stint on baby products,” said Chan. “They want to give their children everything that’s good quality, and they don’t trust domestic brands after some scandals.”

    Showroom Expansion

    The company plans to open other showrooms across China to market its online offerings. It could draw more traffic with low-value goods before switching back to the luxury products for which Chow Tai Fook is known, said Bloomberg Intelligence analyst Catherine Lim.

    “New players can only succeed in surviving by focusing on some niche segments that existing players don’t focus on,” she said.

  • Hong Kong January retail sales fall for 11th straight month

    Hong Kong January retail sales fall for 11th straight month

    Hong Kong retail sales, which suffered their worst decline in 13 years last year, saw weak sentiment extending into January on slumping tourist arrivals, weak local consumption and a strong local currency.

    Retail sales in January slid 6.5 per cent from a year earlier to HK$43.6 billion (US$5.61 billion) in value terms, compared with an 8.5 per cent decline in December. In volume terms, January sales decreased 5.2 per cent.

    “The near-term outlook for retail sales will remain constrained by the sluggishness in inbound tourism,” the government said in a statement. “External uncertainties, including a dimmer global economic outlook and US interest rate normalisation, may add further headwinds.”

    The value of retail sales fell for a second year in 2015 – down 3.7 per cent – the biggest decline since 2002 when they dropped 4.1 per cent.

    Hong Kong is confronting mounting economic challenges as the prospect of US interest rate rises drives fears of capital outflows that could put pressure on the financial hub at a time when China’s economy is growing at its slowest pace in 25 years.

    Tensions that have rocked the city, including protests over the Lunar New Year that was sparked off by street vendors, have added to the strains on the retail and tourism industries already suffering from a drop in mainland tourists.

    EXPENSIVE DESTINATION

    The strong Hong Kong dollar, which is pegged to the US dollar, has made the city an expensive destination and China’s cash-rich tourists are heading for more exotic destinations.

    Hong Kong tourist arrivals, which fell 2.5 per cent in 2015 in the first decline since 2003, dropped 6.8 per cent from a year ago to 5.23 million in January. Mainland visitors, which accounted for 77 per cent of the total, slumped 10 per cent to 4.04 million.

    Hong Kong’s comparatively high rents also hurt retailers as fewer mainland tourists come to shop, forcing operators to close and scale back expansion.

    January sales of jewellery, watches, clocks and valuable gifts in value terms fell 16.3 per cent, a 17th consecutive month of decline.

    Department store sales slid 3.6 per cent on year, against a 12.3 per cent drop the previous month. Wearing apparel fell 4.9 per cent while medicines and cosmetics decreased 3.6 per cent.

    Hong Kong’s top jeweler Chow Tai Fook Jewellery Group and cosmetics chain operator Sa Sa International Holdings saw sales declines at least 20 per cent during the key Lunar New Year shopping season in February.

    Department store operator Lifestyle International also saw a double-digit decline in sales during the holiday.

    Last week, Hong Kong rolled out a multi-billion dollar package of sweeteners to bolster its economy as a slowdown in China and rising political tensions deepen its economic woes.

     

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  • Bleak New Year for Chow Tai Fook

    Bleak New Year for Chow Tai Fook

    Chinese New Year sales for the Chow Tai Fook Jewellery Group took a dive in Mainland China, Hong Kong and Macau.

    Unaudited figures for the period, from January 25 to February 14, show the value of retail sales dropped 30 per cent in China and 23 per cent in Hong Kong and Macau – a 29 per cent dip for the group – compared with the previous Chinese New Year.

    Same-store sales dropped 31 per cent in China, 22 per cent in Hong Kong/Macau, and 28 per cent for the group. Same-store sales figures were also broken down into product – gem-set jewellery dropped 30 per cent in China, 3 per cent in Hong Kong/Macau, and 20 per cent for the group, while gold products fell 33 per cent in China, 25 per cent in Hong Kong/Macau, and 31 per cent for the group.

    Chow Tai Fook says the plunge in China was mainly because of more outbound travel from the mainland during the celebration, and a weakening of consumer sentiment for luxury goods because of the economic slowdown and volatility in the stock market.

    It attributes the decrease in Hong Kong and Macau to the drop in mainland tourists to Hong Kong as well as continuing weak retail sentiment in both regions.

    “Management anticipates the retail business environment will continue to be challenging for the fourth quarter and the sales performance will be worse than that of the third quarter,” the company said a statement.

  • Hong Kong’s Chow Tai Fook, Sa Sa saw sales fall over Lunar New Year

    Hong Kong’s Chow Tai Fook, Sa Sa saw sales fall over Lunar New Year

    Hong Kong’s top jewellery firm Chow Tai Fook and cosmetics retailer Sa Sa saw sales declines of at least 20 percent during the key Lunar New Year shopping season, as China’s slowing economy weighed on consumer spending.

    Chow Tai Fook Jewellery Group Ltd, Hong Kong’s largest jewellery firm by market value, saw its retail sales drop by almost a third in mainland China and by 23 percent in Hong Kong and Macau between Jan. 25 and Feb. 14, compared with the previous year’s Lunar New Year period. The buying spree usually happens a week or more before the start of Lunar New Year, which fell on Feb. 8 this year.

    Same-store sales were down 31 percent in mainland China and down 22 percent in Hong Kong and Macau, Chow Tai Fook said in a filing to the Hong Kong stock exchange on Wednesday.

    “The management anticipates the retail business environment will continue to be challenging for the fourth quarter and the sales performance will be worse than that of the third quarter,” the jeweller said.

    China’s economy, which posted the slowest growth since 2009 in the fourth quarter, and the government’s crackdown on corruption have stifled spending among Chinese consumers, who typically flock to Hong Kong to shop for everything from handbags to milk powder.

    On Wednesday, another prominent retailer in Hong Kong also reported dismal sales. Sa Sa International Holdings Ltd, which has a store in almost every corner of Hong Kong, posted a 20 percent drop in retail sales in Hong Kong and Macau over Feb. 8-14, compared with the previous year’s Lunar New Year period. Sa Sa’s same-store sales fell 19 percent over the same period, it said in a filing to the Hong Kong stock exchange. The announcements came after Hong Kong’s market closed on Wednesday. Chow Tai Fook’s shares ended 6 percent lower, while Sa Sa’s stock was down by 0.9 percent, versus the main Hang Seng index’s 1 percent fall.

     

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  • Chow Tai Fook invited to open second shopping mall in Shanghai Free Trade Zone

    Chow Tai Fook invited to open second shopping mall in Shanghai Free Trade Zone

    Two months after jeweller Chow Tai Fook set up its first shopping mall selling Hong Kong products in the Qianhai free-trade zone, it was offered opportunities by several mainland cities, including Shanghai, inviting it to build such malls in their free-trade zones, a senior management official at the company said.

    Chan Sai-Cheong, Executive Director of Chow Tai Fook and who overlooks the company’s mainland operation, told the Post in a phone interview that “ [officials of] several free-trade zones of mainland cities have approached us, asking us to open a shopping mall there.”

    This fulfilled the wish made by Adrian Cheng Chi-Kong, the third-generation heir of billionaire Cheng Yu-tung’s family, at the opening ceremony of its Qianhai shopping mall – HOKO, when he said if Shanghai offered an opportunity, he will consider opening such malls in their free-trade zone.

    Unlike other traditional shopping malls, CTF’s HOKO mall provides two ways for customers to check out – the traditional “grab pay and go” model or and the online channel, under which customers order through a smartphone app and have the goods delivered to their home.

    Hong Kong retailers, such as Sasa, Chow Tai Fook, ISA, G2000 are among the 21 tenants.

    Retail prices of the online channel are typically cheaper than the traditional channel, as the Chinese government only applies a special “postal tax” for imported goods brought from the so-called cross-border e-commerce channel.

    Otherwise, customers need to pay three types of taxes if they purchase imported goods from traditional channels, which are usually higher.

    Despite the olive branch extended by the mainland free-trade zones, Chan said CTF will take its time before it decides on opening a second mall in other cities.

    The business performance of its second phrase mall in Qianhai, which is set to launch before May, will be a testing ground, said Chan.

    “We won’t rush in a hurry,” Chan said, adding the company didn’t have a timetable at the current stage.

    Located in the same area in Qianhai, the second phase HOKO mall will double the size of its first one, occupying a 12,000 sq m area.

    Chan said tenants would be more diversified compared to those in phase one as restaurants, supermarkets, automobile parts, electronics and furniture stores could be expected there.

    But only 50 per cent of the spaces would be used for retail, Chan said. The other half would be reserved for projects that enhance customers’ experience.

    He emphasised that the company won’t let too many milk powder retainers in just because their sales performances were among the best in its phase one mall.

    Beside, a bauhinia garden featuring Hong Kong characteristics will be added to CTF’s Qianhai complex, outside its shopping mall, with a group of selected art pieces on display. He said the idea was initiated by Adrian Cheng Chi-Kong, who also added art pieces to Hong Kong’s K11 mall.

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  • Chow Tai Fook sales slide continues

    Chow Tai Fook sales slide continues

    Jeweller Chow Tai Fook continues to be battered by the declining number of wealthy Mainland Chinese tourists visiting Hong Kong and Macau.

    The Hong Kong listed retailer has revealed its same store quarterly sales slumped 23 per cent in Hong Kong and Macau in the three months to December 31 and by 6 per cent in Mainland China. It said those figures were “similar to the same store sales sales performance” of the preceding quarter.

    In total value, after currency effects were taken into account, total sales fell 11 per cent, compared with 10 per cent in the preceding quarter. Mainland sales, on a constant currency basis, were down two per cent.

    The group opened a net 31 points of sale during the quarter, including 28 jewellery outlets and two watch stores in Mainland China, and a net one store elsewhere, taking its total point of sale count to 2317 as at December 31.

    Meanwhile, Chow Tai Fook MD Kent Wong said on a conference call that the company expects to close five or six stores in Hong Kong during the next three months as it adjusts its network to reflect the changing shopper demographic.

    He said the domestic market remained challenging with the local currency pegged to the US dollar which is widening the gap between the Hong Kong dollar and China’s renminbi.

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  • Chow Tai Fook’s Hong Kong, Macau Sales Plunge on Fewer Chinese

    Chow Tai Fook’s Hong Kong, Macau Sales Plunge on Fewer Chinese

    Chow Tai Fook Jewellery Group Ltd., the world’s largest listed jewelry chain, said same-store sales in Hong Kong and Macau plunged 23 percent in the final three months of 2015 as fewer mainland Chinese tourists visited the two cities.

    Same-store sales, for outlets open at least a year, fell 6 percent for those in mainland China, bringing the total decline to 15 percent for the fiscal third quarter ending December, the company said in a statement Friday. The retail sales value for all of the company’s outlets slumped 11 percent in the period, it added.

    The operating environment in China as well as sales outlook for the Lunar New Year holidays in February remain challenging, and the company will continue to focus on cost-cutting measures in the rest of the current fiscal year ending March, Managing Director Kent Wong said on a conference call with reporters Friday.

    “The retail jewelry industry is now in a consolidation stage after the rapid growth in the past decade,” Wong said. “What we can do now is to better control cost structure on both rentals and staff costs, while expanding our high-end product lines.”

    Chow Tai Fook in November declared its first-ever special dividend even as it posted the steepest decline in semi-annual profit since it went public, after its shares fell to about 70 percent before its offer price since its 2011 share listing. China’s economic slowdown, as well as campaigns against corruption and extravagant spending have hurt luxury retailers and casino companies.

    The retailer of gems and watches has said it will shut outlets that do not perform well, but doesn’t plan to lay off workers. Still, the number of employees may fall further after it dropped 8 percent in the first half, reducing staff costs by 13 percent, Wong said Friday.

    Chow Tai Fook Chairman Henry Cheng said in November the company has shelved its overseas expansion plans and will focus on the Hong Kong, Macau and mainland China businesses.

    Mainland Chinese tourists to Hong Kong, who accounted for more than 70 percent of the total in November, have dropped 16 percent in the month, according to the city’s tourism board.

    Chow Tai Fook may request rental reductions of 30 percent on average, for the roughly one-third of its Hong Kong stores that renew their lease agreements each year, it had said in November. Wong said the company is in talks to renew leases for three shops in the city.

    The luxury chain’s retail network expanded to 2,317 points of sales as of end-2015, including a net opening of 28 jewelry, and 2 watch outlets in mainland China. It will open between 50 to 60 points of sales in China in the rest of the fiscal year, Wong said.

    Competitor Chow Sang Sang Holdings International Ltd. said it won’t cut prices even as it expects same-store sales to slide during the Lunar New Year holidays, amid a strong Hong Kong dollar that has turned mainland tourists away, the Standard newspaper reported Friday citing Lau Hak-bun, the company’s general manager of Greater China retail.

    Chow Tai Fook’s Wong also said the company has no plan to cut product prices in the future.

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  • Here’s Why All That Glitters Is Not Gold In China Jewelry Market

    Here’s Why All That Glitters Is Not Gold In China Jewelry Market

    Market reports on Wednesday claim that Jewelry manufacturing and retail industry are among the worst hit sectors in China due to a slowdown in the country’s economic growth. Shuibei, which was once the mecca for Jewelry retail and production in China, is now feeling the heat in terms of declining number of consumer visits due to the economic uncertainty in China.

    Among the most pertinent reasons for slumping gold demand in China are the economic slowdown as well as the government’s anti-corruption drive which has resulted in low demand for luxury items. However, the most worrisome sign for Chinese gold market is the fact that the consumers have started to become wary of the prevailing economic uncertainty. The shaken consumer confidence is likely to hit the Chinese gold market, which is also the largest market in world for the precious metal.

    Analysts say that China is entering the maturity phase of its economic cycle after growing exponentially for the last few decades. As the economic growth slows down, there may be uncertainty regarding how the government and certain sectors deal with it. This situation has been made worse by the devaluation of Chinese yuan by the People’s Bank Of China (PBOC) in August. The yuan has suffered a constant decline since and some analysts believe that this might be a deliberate step by the Chinese government.

    The gold prices are already languishing at a six-year low due to global economic uncertainty. Therefore, with China and India, the largest and second largest gold markets going soft, it would only mean more trouble for the global gold prices.

    Many of the businesses in the Shuibei district of Shenzhen have suffered a slump in trade due to the current gloomy economic growth forecast for China. This is happening due to a shift in customer confidence from being enthusiastic to wary.

    According to Wang Zhichang, regional manager of Glory Gold store, the demand for gold is unlikely to pick up anytime soon due to the fact that consumers have lost confidence in the precious metal. Therefore, it is quite possible that the revenue in the Chinese gold industry may fall in 2016 at least 10%. The revenue of Chinese gold market overall has seen a plunge of almost 20% in the current year.

    Mr. Wang also claims that due to the worsening gold market conditions in China, a number of factories had shut their operations in the last 12 months. The impact of the current slump in Chinese economy on local gold market is so widely spread that even the nationwide huge gold retail chains like Chow Tai Fook are forced to close outlets and cut down future store openings.Chow Tai Fook, the largest gold retailer in China in terms of market value, had to suffer a 42% plunge in net profit for the period from April to September 2015. This has forced the company to plan opening of only 60 stores in China in its current financial year which ends in March 2016, instead of the originally planned 150 outlets.

    A representative of Chow Tai Fook opined that the customers had become more rational with their choices and purchases in the recent times. This translates into the pressure under which the Chinese gold industry is at the moment.

    CBN opines that it was only a matter of time before the worse impacts of the economic slowdown in China began to reflect on the country’s booming gold market. With the prices of gold falling on a global level and the economic uncertainty in China, the gold market was always going to suffer. We believe that as the growth in Chinese economy slows down due to the country entering the maturity stage of its economic progression, the consumers are likely to become more wary of making bold acquisitions.

    We believe that Chinese customers are likely to want an added value for the transactions they make in the current circumstances. With the gold prices falling globally, the sense of security of holding on to a precious metal is no longer going to be the driving force for its purchase. Furthermore, doubts over economic growth are likely to force the hand of Chinese consumers towards basic necessities more than luxury acquisitions. Therefore, the struggle in the gold market in China is likely to continue at least for the coming couple of years.

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  • Qianhai Chow Tai Fook mall opens in Shenzhen

    Qianhai Chow Tai Fook mall opens in Shenzhen

    The new Qianhai Chow Tai Fook mall opened its doors in Shenzhen on Monday – selling Hong Kong sourced goods to mainlanders at prices said to be cheaper than in Hong Kong.

    Officially named the Qianhai Chow Tai Fook Global Goods Shopping Center, the 19,000 sqm mall is a joint venture between jeweller Chow Tai Fook and two investment partners.

    A total of 21 retail brands opened stores in the first phase of the development opened yesterday, including beauty products chain Sa Sa, fast fashion brand Giordano and CRCare. They are joined by a range of food and infant formula retailers.

    More stores will join the development when stage two opens next summer.

    The HK$423 million shopping centre has been built inside the Shenzhen special economic zone, taking advantage of tax concessions and allowing mainlanders to buy Hong Kong sourced goods without crossing the border.

    Shenzhen has a population of 20 million creating a huge potential catchment for the development.

    Adrian Cheng Chi-kong, executive director of the Qianhai Chow Tai Fook mall, said it will not be competing with the border shopping mall planned for the Hong Kong side of the border, explaining the two properties will cater for different clienteles.

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  • China’s Slowdown Is Killing Its Luxury Market

    China’s Slowdown Is Killing Its Luxury Market

    Many investors are unfamiliar with the Chow Tai Fook Jewellery Group, but it is in fact the world’s largest publicly traded jewelry chain.

    The company reported its first half profit for 2015 plunged 42 percent due to weak demand in Hong Kong and Macau and an economic slowdown, Macau Daily Times noted.

    Chow Tai Fook’s net income fell to HK$1.56 billion ($201 million) for the six-month period ending in September. In the same period a year ago, the company’s net income was HK$2.69 billion. Sales for the six-month period fell 4.1 percent from a year ago to HK$28.1 billion, while same-store sales fell 18 percent in Hong Kong and Macau, but rose 0.1 percent in mainland China.

    The company warned investors back in early November that its profits are expected to decline due to the weakness in Hong Kong and Macau, along with an unfavorable sales mix of lower-margin gold products and unrealized hedging losses.

    Is Tiffany Winning Where Chow Tai Fook Is Failing?

    Tiffany & Co. reported its third quarter results on Tuesday. Commenting on the Asia-Pacific region, the company said that total sales rose 6 percent in the third quarter and comparable store sales rose 2 percent. Total sales and comparable store sales in the year-to-date period rose 6 percent and 4 percent, respectively.

    On a constant-exchange-rate basis, Tiffany said that it saw “healthy sales growth” in China, but sales declined again in Hong Kong and Macau.

    Tiffany also announced a total sales and comparable store sales growth in Japan of (FX-neutral) of 34 percent and 24 percent, respectively. According to a report by Bloomberg, Tiffany is “eating Chow Tai Fook’s breakfast” as Chinese tourists accounted for a “significant” portion of the growth Tiffany experienced in Japan.

    Bloomberg also noted that Chinese goods don’t have a “particularly good” reputation among Chinese shoppers, which might also explain why Tiffany is seeing success in a region where Chow Tai Fook “should be cleaning up.”

  • Luk Fook latest to warn of falling profit

    Luk Fook latest to warn of falling profit

    Luk Fook has become the second major jewellery retailer this week to warn shareholders of a severe impact on its bottom line.

    In a filing with the stock exchange yesterday, Luk Fook said it anticipated a decline of about 40 per cent compared to the corresponding period last year.

    The company said the drop was primarily due to declining gem-set jewellery product revenue, a fall in the overall gross margin as a result of increased sales mix of gold products driven by the small-scale “gold rushes” and a higher rent to revenue ratio.

    Expanded losses in investments in relation to Hong Kong Resources Holdings and its subsidiary also contributed.

    Earlier this week rival jeweller Chow Tai Fook warned of a profit plunge as high as 50 per cent citing similar reasons.

  • Chow Tai Fook in profit plunge

    Chow Tai Fook in profit plunge

    Listed Hong Kong jeweller Chow Tai Fook has warned shareholders its first half profit is likely to be 50 per cent less than for the same period last year.

    In a statement filed with the stock exchange, the board said the decrease is mainly attributable to the year-on-year decline in revenue brought about by weak consumer sentiment in Hong Kong and Macau and a tighter gross profit margin.

    The margin was impacted by both a change in the product mix with increased sale of gold products and unrealised hedging losses on gold loans for the period contrasting with an unrealised hedging gain in the same period last year.

    “As the company is in the process of preparing the interim results of the group for the six months ended 30 September, the information contained in this announcement is only based on the preliminary review of the company’s management accounts which have not been reviewed or audited by auditors of the company.”

    The size of the decline comes as something of a surprise, given the company revealed a four per cent increase in sales in the quarter to September 30 just four weeks ago.

    Back then Chow Tai Fook described the Hong Kong and Macau retail market as “continuing lacklustre”.

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  • Mainland China helps Chow Tai Fook figures

    Mainland China helps Chow Tai Fook figures

    Chow Tai Fook Jewellery Group has reported a four per cent year-on-year increase in retail sales in the three months to September 30.

    The welcome increase was attributed to surge in demand for gold as a result of falling gold commodity price since mid July.

    The Hong Kong listed company says same store sales fell three per cent in value terms and rose one per cent in volume terms.

    Mainland China stores led the growth, with Hong Kong and Macau shops showing a same store decline of 13 per cent and an overall decline of five per cent. Volume fell 18 per cent.

    But in China, same store sales rose six per cent in value and 13 per cent in volume.

    Chow Tai Fook described the Hong Kong and Macau retail market as “continuing lacklustre”.

    Sales of gem-set jewellery there fell 24 per cent on a same store basis, but just four per cent in the mainland.

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  • Chow Tai Fook changes strategies to tackle tough market

    Chow Tai Fook changes strategies to tackle tough market

    Chow Tai Fook Jewellery Group is renegotiating store rents and consolidating its retail network in order to manage rental costs, chairman Henry Cheng Kar-shun said on Thursday.

    Amid a downturn in the city’s retail landscape, the largest Hong Kong-listed jeweller in terms of market capitalisation had also shifted focus to smaller-priced items to attract customers, Cheng said.

    Business is getting tougher for retailers, with sales in July dropping 2.8 per cent from a year earlier to HK$37.6 billion, following a 0.4 per cent fall in June. The drop in July was the biggest since March’s decline of 2.9 per cent.

    Sales of jewellery, watches, clocks and gifts all recorded a smaller decrease of 5 per cent, after four months of double-digit falls.

    “There are a number of external factors that are out of our control, such as the macroeconomic conditions, the central government’s policies and the devaluation of China’s currency,” Cheng said. “What we can do is do our best to operate the business well.

    “While we are still making profits in all of our [Hong Kong] stores, we may consider cutting some to maximise profits. For example, if we have three shops on one street, we may opt for two in order to cut costs.”

    Facing a sluggish retail market, commercial landlords are now willing to set more realistic prices and reduce rents.

    Cheng said the company was renegotiating with landlords to lower rents and the extent of rent cuts would depend on the business performance of the store concerned, said Cheng, suggesting the average cut could be between 20 and 30 per cent.

    Chow Tai Fook in June reported net profit for the year ended March fell about 25 per cent to HK$5.46 billion from the previous year.

    Revenue dropped 17 per cent to HK$64.28 billion.

    The average selling price of gem-set jewellery fell 12.7 per cent and that of gold products declined 1.2 per cent.

    The company extended its e-commerce network to strengthen its capability to reach more online customers, particularly the younger generation, said Cheng, adding the online division was making profits.

    He was speaking at an event to mark the company’s unveiling of a diamond piece centred on a 24 D-colour internally flawless diamonds cut from a 507.55 carat rough diamond, known as the Cullinan Heritage, that Chow Tai Fook acquired for HK$275 million in 2010.

  • Chow Tai Fook wins 40 per cent rent cut

    Chow Tai Fook wins 40 per cent rent cut

    Jeweller Chow Tai Fook has reportedly re-signed a retail shop rental lease at a 40 per cent reduction.

    It’s a rent reduction which will energise the retail sector, but not doubt send shivers through Hong Kong’s property community.

    Several listed luxury retailers have in recent months been openly discussing expectations of reduced rents when re-negotiating with landlords over lease renewals. Their expectations are grounded in falling sales of luxury goods resulting from Mainland China;s gift-giving crackdown and a reduction in the number of cashed up, big spending Chinese tourists hitting the territory.

    But the sort of reductions being discussed have ranged between 10 and 20 per cent.

    According to Ming Pao, Chow Tai Fook has renewed the lease on its Mong Kok Bank centre branch – shops 6 and 7, on the ground floor.

    The previous rent agreed was $1.3 million in 2012. The new rent rate is 40 per cent lower. Other terms, such as the lease term, have not been disclosed.

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