Chow Tai Fook posts strong profit despite retail turmoil

Hong Kong-headquartered jeweler Chow Tai Fook has ended the financial year with a US$374 million profit attributable to shareholders.

While that is down 36.6 percent on last year, and its worst annual result in a decade, it underpins the strength of the company at a time that retail sales in Hong Kong and China have been ravaged by Covid-19.

Sales for the year to March fell 14.9 percent to $7.3 billion, with Hong Kong and Macau hardest hit, down 38.7 percent, and on the mainland by 15.1 percent.

Besides ongoing social unrest in Hong Kong since June last year, which decimated the numbers of inbound tourists from Mainland China, and Covid-19 impacting in the first quarter of this calendar year, rising gold prices also dented consumer demand for jewelry.

In its earnings statement, Chow Tai Fook said that while Mainland China operations “suffered severely” in the final quarter due to the pandemic, the company has seen signs of recovery as restrictions on shopping and social distancing were lifted and its short-term business outlook is “cautiously optimistic”.

“We shall continue our market expansion strategy through franchise model as the situation stabilizes and the online-offline channel integrations to take advantage of the digital trends. Also, we shall continue our multi-brand strategy to better serve each unique customer segment.” However, the company expects the Hong Kong and Macau market to remain challenging in the foreseeable future.

“As the customer base has been reshaped, we shall continue to consolidate our retail network, rationalize cost structure and refine our business strategies. Apart from focusing on store efficiency, we also place an emphasis on transforming our current business model through innovation and technology in order to enhance retail experience, improve operational efficiency and strengthen our market leadership position.”