Lacklustre year for Chow Sang Sang
It has been a year without sparkle for jewellery company Chow Sang Sang Holdings International, with declining sales and profits.
While uncertainties in the global economic and political environment drove the gold price up by more than 20 per cent last year, there was no increase in demand for gold jewellery unlike hikes in recent years, says the company.
Demand was limited by weak consumer sentiment, the softness in the property markets and the lack of momentum in the stock markets, particularly for Hong Kong.
Except for December, retail sales value in Hong Kong declined year on year. The turnover for the year fell 16 per cent to HK$16 billion (US$2. billion). Profit attributable to equity holders dropped by 34 per cent to HK$742 million.
Jewellery retail accounted for 87 per cent of the group’s turnover, with the segment’s operating profit falling by 6 per cent to HK$947 million.
For Hong Kong and Macau, sales slipped 26 per cent, with same-store sales down 25 per cent.
As the gold price increased, the total weight of gold sales dropped by 34 per cent, says the company. Sales of gem-set jewellery have not reversed their downward trend since 2015.
During the year, three Chow Sang Sang shops in Hong Kong’s tourist district were closed, but shops were opened in both Kwun Tong and Yuen Long.
With a dearth of visitors in Macau, shops in arcades performed worse than those in the main street.
There were small savings as some of the heftier shop leases were renewed in the last quarter of the year, and capital expenditure amounted to HK$33 million, mainly for new shops and refits.
In Mainland China, total turnover slipped by 5 per cent to HK$7.339 billion. Same-store sales fell by 4 per cent.
Gold sales also had a setback, with same-store sales slumping 13 per cent. However, there was positive momentum for gem-set jewellery.
Online sales continued to grow, accounting for about 10 per cent of China sales. Gold products
dominate the sales mix.
At year-end the group had 374 shops in 111 cities. There were 47 openings while 16 stores closed.
With store openings and the refitting of 68 outlets, plus the setting up of a diamond cutting and polishing factory plus a production capacity upgrade, capital expenditure came to RMB136 million.
In Taiwan, the retail sector continued to be weak with no significant change in the group’s results from the previous year.
For its wholesale of precious metals, the company saw turnover drop by 15 per cent to HK$1.908 billion, while operating profit fell by HK$10 million.