Turnaround for Chow Sang Sang Holdings
Jeweller Chow Sang Sang says operating profit for its first-half retail business has returned to positive growth after three years of falling.
It had a year-on-year increase of 4 per cent to HK$500 million (US$63.8 million).
Jewellery retail accounted for 87 per cent of the group’s turnover, which overall lifted 3 per cent to $8 billion.
Hong Kong and Macau retail sales slipped 5 per cent, of which 4 per cent was attributable to shop closures. Same-store sales growth for the period dropped 3 per cent but same-store sales were positive for half the reporting period, including June.
Compared to the 26 per cent fall in same-store sales for last year’s first half, the downward trend seems to have bottomed out, says the company.
Three Chow Sang Sang shops were closed during the half, but another was opened in Tung Chung.
Relatively weak tourist traffic was still hitting sales in Macau. Shops in arcades fared worse than main-street stores.
Chow Sang Sang says total shop rental expenditure at $52 million was down on last year. For leases renewed in the first half, the adjustments ranged between a 6 per cent increase to a 65 per cent reduction. Three large shops in tourist areas are due for renewal next year.
In Mainland China, total turnover rose 8 per cent year-on-year to $4040 million with 8 per cent same-store sales growth.
While jewellery maintained positive momentum, gold sales were stronger.
Online sales continued to grow, accounting for about 13 per cent of China sales. Gold products dominated the sales mix.
At the end of June, the company had 395 shops in 116 cities – 29 new shops and eight closures.
Retail remained weak in Taiwan with no significant change.
“In Hong Kong, we will continue with the realignment of our network to match the change in consumer patterns and preferences,” says the company. “Overall, we expect to reduce the amount of floor space while maintaining more or less the same number of shops.”
Chow Sang Sang says that as China’s economy continues growing, consumers are becoming more sophisticated, offering growth opportunities through product and brand differentiation.
“As our online sales expand, we are putting more effort into offering a seamless customer experience. We will continue to open new stores at around 50 a year, half of them in shopping malls to allow more flexibility in customer services.”