Chow Tai Fook remains calm in the storm

A 23.5 per cent drop in revenue to HK$21.526 billion (US$2.775 billion) was recorded by Chow Tai Fook Jewellery Group for its latest six months.

Its interim results for the period to September 30 show same-store sales in Hong Kong/Macau dropped by 25.7 per cent and in China by 20.9 per cent.

Gross profit was down by 13.1 per cent to HK$6828 million from HK$7857 million in the first quarter.

In its executive summary, the group says that in response to the rapid market changes and volatile macroeconomic environment across Greater China during the first half, it focussed on enhancing store productivity and efficiency.

The group also capitalised on its vertically integrated business model and proprietary technology to introduce the Chow Tai Fook T Mark diamond brand in the first half, which it describes as “an important milestone in our heritage” that “revolutionised the current diamond-industry practice”.

Despite revenue declining with the market slowdown in the first half, the group’s adjusted gross profit margin improved, mainly because of an enhanced product mix and an uplift in gross profit margin for gem-set jewellery and gold products.

As at the end of September the group’s retail network comprised 2326 points of sales, and increase of seven. During the first half, 26 points of sale were opened in shopping malls while 19 were closed in department stores on the mainland.

Also in the mainland the group promoted its premium diamond brand Hearts On Fire, opening two points of sale and 30 shop-in-shop/counter-in-shop outlets for a total of seven POS and 148 shop-in-shop/counter-in-shop.