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Soaring gold price, China recovery boost Chow Tai Fook results

26 November 2020


Mainland China is delivering solid sales recovery for Hong Kong-headquartered jeweller Chow Tai Fook.


While same-store sales on the mainland were flat for the half year to September 30, the company benefited from the opening of 286 new jewellery store points of sale there, 28 of them for the company’s new Jewelria banner.


“Business in Mainland China witnessed a steady recovery on the back of the easing Covid-19 situation,” the company said in a results filing.


But in its home market of Hong Kong and Macau, same-store sales plunged 65.7 per cent due to a lack of mainland tourists in the city resulting from border closures to contain the spread of Covid-19. Four stores bearing the Chow Tai Fook banner were closed in Hong Kong, all in areas popular with tourists, and more may follow.


Overall revenue for the company fell by 16.5 per cent for the half year to $3.18 billion, however core operating profit rose by 15.6 per cent due to an adjusted gross profit margin improvement resulting from the surging gold price.


Profit attributable to shareholders reached $288 million, a significant increase on the $198 million of the same period last year.


The company ended the half year with 4153 points of sale, a net increase of 303 year on year. It plans to open new stores under its CTF Watch brand, selling premium timepieces, after strong sales on the mainland.


The company said its move to embrace digital sales channels was paying off and would be subject to ongoing investment.


“With a solid foundation that has already been built through our “Smart+ 2020” strategic framework, we are pleased to move forward with our Dual Force Strategy. It will steer us towards the continual expansion of footprint and digital empowerment in order to continue to deliver exceptional customer experience that creates long-term brand differentiation and loyalty,” the company said.