Chow Tai Fook turns around second-half

While revenue fell by 9.4 per cent to HK$51.2 billion (US$6.5 billion) for the year ended March 31, second-half revenue growth was 4.4 per cent year-on-year compared to a 23.5 per cent decline in the first half, Chow Tai Fook Jewellery Group reports.

Its audited results show same-store sales in Mainland China, and Hong Kong and Macau declined 5.2 and 12.4 per cent respectively, while gross profit fell by 4.3 per cent to$14.9 billion. Core operating profit dropped 7.9 per cent to$4.6 billion.

Chow Tai Fook’s retail network grew by 62 outlets to reach 2381 points of sale as at the end of March.

Increasing steadily over the past few years, the revenue contribution from Mainland China contributed more than 60 per cent of the group’s revenue for the year. During the second half, China’s revenue growth rebounded by 6.8 per cent, while Hong Kong, Macau and other markets returned to growth of 0.8 per cent.

For the year, same-store sales growth (SSSG) was driven by an increase in average selling price. Same-store sales volume dropped by 15.8 per cent on the mainland and 18.8 per cent in Hong Kong and Macau.

“Mainland China has consistently outperformed Hong Kong and Macau in terms of SSSG trend over the past eight quarters, signifying a stronger recovery momentum,” says the company.

Mainland same-store sales rebounded to 8.2 per cent growth in the second half, versus a 19.2 per cent decline in the first half.

 

Trend reversed

SSSG for Hong Kong and Macau returned to positive in the fourth quarter – the first time they have had positive growth after 12 consecutive quarters of decline.

During the year the company opened 235 points of sale in China, with 168 closures. “With an easing trend of consolidation in department stores, our POS reduction has also moderated compared to last year,” says the company.

“In Hong Kong and Macau we continued to optimise our retail network to enhance efficiency and productivity, with seven points of sales being closed during the year.

“We also opened three outlets, in Korea, Malaysia and the US, to capture opportunities arising from the demand of Chinese customers there.”

For its jewellery business, 76 outlets were opened in malls, while the company’s footprint in department stores continued to diminish with 39 points of sales being closed.

“We continue to integrate our online and offline resources to direct traffic to our distribution channels empowered by digital marketing,” says Chow Tai Fook. “Our e-commerce business growth accelerated, mainly thanks to strengthened co-operation with major online platform partners. A notable example is our online order distribution initiatives with JD.com and Tmall.

“Online orders are routed directly to our physical point of sale nearby the customer. By mobilising our extensive physical retail network, we can achieve full O2O interactions and enhance customer experience by shortening delivery time and cost.”

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