Chow Tai Fook Jewellery Group yesterday reported a 3.9 percent rise in profit, buoyed by a sales rebound in the second half of the year as consumer sentiment improved.
Executive director Adrian Cheng Chi-kong said Hong Kong’s retail and jewelry industry has already bottomed out. He also expects a single-digit increase in sales in 2018.
Cheng said the company is planning to target local VIP customers and residents of the New Territories instead of tourists, as the company’s performance was previously affected by the decrease in visitor numbers.
To tap the demand of Chinese customers overseas, China’s largest jeweler by market value launched three points of sale in Korea, Malaysia and the United States in the fiscal year that ended in March.
Net profit came in at HK$3.06 billion for the year ended in March, from HK$2.94 billion profit a year ago, snapping two consecutive years of decline. That matched a HK$3.1 billion forecast by SmartEstimate.
Revenue for the 12-month period slipped 9.4 percent to HK$51.25 billion from HK$56.59 billion in the same period last year as lower purchases by mainland tourists continued to affect the sales volume.
Meanwhile, same-store sales of its jewelry business in mainland China fell 5.2 percent for the year, while those in Hong Kong and Macau plunged 12.4 percent.
Chow Tai Fook plans to launch 70 to 100 sales points in China this fiscal year, but may close five non-efficient stores in Hong Kong due to high rent and feeble sales.
As of the end of March, the company’s retail strength expanded to 2,381 points of sale, including China, Hong Kong, Macau and Taiwan, compared with 2,319 in the year before.
Analysts are holding positive views on the city’s retail segment, aided by signs of improvement in the operating environment.
Last week, Hong Kong posted a second month of growth in its retail sales, rising 0.1 percent in value in April. Sales of jewelry and watches edged up 0.5 percent in value.
Hong Kong’s tourist arrivals in April rose 1.9 percent from a year earlier, according to the Hong Kong Tourism Board.
However, some retailers remain conservative. Cartier owner Richemont said in May that it was too early to say the worst was over in the Hong Kong market, which has collapsed over the past two to three years.
Shares of Chow Tai Fook have surged more than 40 percent this year, outpacing an 18.5 percent rise in the benchmark index.