RAPAPORT... COVID-19 heavily affected sales at Hong Kong-based jeweler Chow Sang Sang in the first two months of 2020, as a lockdown in China forced it to shut most of its stores in the country.
“The first three weeks into 2020 [were] promising [but] unfortunately, the positive trend was quickly derailed by the outbreak of the coronavirus disease in the last week of January,” the company said last week. “The impact on our business is alarming.”
The company closed 77% of its stores in mainland China in the first two weeks of February, as the government issued a lockdown in an effort to contain the pandemic. Same-store sales for the region fell 45% in the first two months of the year, while those in Hong Kong and Macau slid 44%. While the jeweler reopened more than 95% of its stores in March, they are still operating with shortened hours.
To minimize costs, Chow Sang Sang has negotiated reduced rent for many of its stores, and has cut staff hours. The company has also delayed the opening of new stores, and rerouted some of the money planned for store refurbishment, it noted.
Group sales for 2019 dropped 6% to HKD 17.74 billion ($2.29 billion), as revenue from jewelry retail fell 5% to HKD 16.26 billion ($2.1 billion). Proceeds from other businesses, including property, slipped 12% to HKD 1.48 billion ($190.6 million). Profit plunged 36% to HKD 643.5 million ($83 million).
Revenue from mainland China increased 4% to HKD 9.69 billion ($1.25 billion), as the company’s new stores performed well. Online commerce also improved, accounting for approximately 16% of the region’s total sales. In the local Chinese currency, revenue rose 9%, while same-store sales were down 1%.
Sales in Hong Kong and Macau fell 16% to HKD 7.91 billion ($1.02 billion), as tourism slowed due to anti-government protests, the jeweler said. Same-store sales for the region slipped 12%.
The company plans to open new stores in 2020, but is limiting the number to about 30 locations, which it feels will improve its penetration of key cities.
“The economy will eventually recover from this [pandemic],” Chow Sang Sang added. “How long it takes remains to be seen. Domestic consumption will be a key to [restarting] the economic growth which is important to the stability of the country.”
Image: A Chow Sang Sang store in Beijing, China. (Cathy Tam)
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