RAPAPORT... Chow Sang Sang is expecting profit to plummet for the first half of the year amid store closures and a sharp decline in tourism to Hong Kong.
Profit will fall between 65% and 70% year on year to an estimated HKD 200 million ($25.8 million) in the six months ending June 30, compared with HKD 615 million ($78.4 million) a year ago, the company warned last week. The jeweler was forced to shut 77% of its stores in mainland China, and a number of locations in Hong Kong, in the first two weeks of February as the government imposed a lockdown to contain the coronavirus pandemic. When the company reopened most of its China and Hong Kong locations in March, they were still operating with shortened hours.
Weak consumer demand and the near halt in visitors from the mainland to Hong Kong — an important source of luxury sales — have also impacted the results, Chow Sang Sang noted. In February, the Hong Kong government imposed a two-week quarantine on tourists visiting from the mainland, which has deterred many visitors. During the first half of the year, the number of tourists coming to Hong Kong plunged 90% to 3.5 million. Some 2.7 million of those were from the mainland, a 90% drop over the same period a year ago.
To weather the downturn, the company has restructured its store network, and is imposing cost-saving measures and negotiating with its landlords, it noted. It will release its results for the first half later this month.
Image: A Chow Sang Sang store in Shanghai, China. (Chow Sang Sang)
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