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Chow Tai Fook Revenue Tumbles Due to Virus

Apr 12, 2020 7:30 AM   By Rapaport News
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RAPAPORT... Chow Tai Fook’s sales slid in the fourth fiscal quarter amid sluggish consumer demand and store closures brought on by the coronavirus pandemic.

Retail sales slumped 41% in mainland China in the three months ending March 31, while same-store sales — at branches open for at least year — plunged 50%, the jeweler reported last week. Both retail sales and same-store sales in Hong Kong and Macau plummeted 65% during the period. Same-store sales only include shops that Chow Tai Fook operates itself, as opposed to franchises.

Gold jewelry sales fell 54% on a same-store basis on the mainland and 67% in Hong Kong and Macau. The decrease was caused by heavy volatility in the price of gold combined with a slowdown in spending due to the spread of COVID-19, the company noted.

Same-store sales of gem-set jewelry dropped 64% in Hong Kong and Macau and 50% in mainland China.

During the period, the pandemic forced Chow Tai Fook to suspend operations at more than 40 locations in Hong Kong and Macau, and at 80% of those in China. The remaining stores were operating with shortened hours. The company has since reopened locations, with around 70% of its points of sale in mainland China and 64% in Hong Kong and Macau operational as of February 29.

The company expects group revenue to fall 11% to 13% for the year, while profit will drop 7% to 9% according to unaudited reports for the 11 months ending February 29, it said. Inventory as of February 29 was 15% higher than the same period a year ago.

Chow Tai Fook opened a net 65 outlets in mainland China and closed four in Hong Kong during the January-to-March period. The retailer operated 3,850 locations at the end of the quarter, including the Enzo chain, which it purchased in January.

Image: A Chow Tai Fook store in Hong Kong. (Shutterstock)
Tags: Chow Tai Fook, Coronavirus, COVID-19, Rapaport News
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