Chow Tai Fook Jewellery Group Ltd., the world’s largest publicly traded jewelry chain, posted its steepest decline in semi-annual profit since listing, yet also declared its first-ever special dividend of 42 Hong Kong cents per share while easing off on expansion plans. In the six months that ended September 30, sales fell 4% to $3.6 billion due to weak consumer sentiment in Hong Kong and Macau and declining numbers of tourists visiting Hong Kong from mainland China. Profits fell 42% to $201 million for the six months ended September, the jeweler said Tuesday, in line with its profit warning issued Nov. 10 which stated that net profit may drop 40% to 50% in the six months to Sept. With the special dividend, Chow Tai Fook is trying to boost investor returns as the share price slumped this year. Chow Tai Fook’s shares have plummeted 43% year to date, compared with the 4.3% decline in the benchmark Hang Seng Index, as China’s economic slowdown hurt luxury retailers.
The chain will shut outlets that do not perform well, but doesn’t plan to lay off workers, said Chairman Henry Cheng. “The retail market is soft now, but I think it’s just short-term. I don’t have any plans on expanding overseas,” he said, adding it will instead focus on the Hong Kong, Macau and mainland China businesses. Revenue in Hong Kong, Macau and other markets excluding mainland China fell 7% to $1.5 billion. Jewelry sales in mainland China performed better, only losing 1% to $2 billion. The entire presentation of the interim report is available here.