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Chow Tai Fook’s 1H Revenue Slips 4%, Profit -43% as Hong Kong Slumps
Nov 24, 2015 6:56 AM
By Rapaport News
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RAPAPORT... Chow Tai Fook reported that sales fell 4 percent to $3.6
billion (HKD 28.1 billion) in the six months that ended September 30 due to
weak consumer sentiment in Hong Kong and Macau and declining numbers of
tourists visiting Hong Kong from mainland China. Profit plummeted 43 percent to
$201.4 million, the Hong Kong jewelry retailer said.
Same-store sales in Hong Kong and Macau slumped 18 percent,
while mainland China comparative sales were basically flat. Same-store sales
fell 9 percent overall, according to a statement November 24.
Revenue in Hong Kong, Macau and other markets excluding
mainland China fell 7 percent to $1.5 billion. Jewelery sales in mainland China
performed better, edged down 1 percent to $2 billion, while watch sales in that
market slid 12 percent to $115.5 million.
Across all geographical markets, sales of gold products
increased 7 percent to $2 billion mainly due to a surge in demand when gold
prices tumbled in July and August 2015. Non-gold sales fell, with gem-set
jewelry sales declining 9 percent to $974 million and sales of platinum or
karat-gold products plummeting 24 percent to $460.8 million. Watch sales fell 21
percent to $182.3 million.
Segmented another way, retail sales in mainland China
increased 4 percent to $1.6 billion, while wholesale revenue declined 15
percent to $478.6 million.
Administrative expenses increased 15 percent to $155.8
million but selling and distribution costs fell 3 percent to $592.8 million.
The group made a net addition of 29 points of sales during
the half year, bringing its network to 2,286 at September 30. It closed 115
points of sales, or 5 percent of its total. This is a higher closure rate than
the company’s historical average as there were more closures and store
restructurings in mainland China to cater for the evolving shopping preferences
in the retail sector, according to the company. The group also consolidated
some of its low-performing points of sale, mainly in eastern and southern China.
Inventory shrunk 6 percent to $4.8 billion. Of this,
inventory of raw materials for gem-set jewelry decreased 1 percent to $860
million and inventory of finished gem-set jewelry goods fell 5 percent to $1.7
billion.
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Tags:
China, Chow Tai Fook, earnings, Hong Kong, macau, Rapaport News, retail
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