Fashion
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.
