Jewelry retail giant Chow Tai Fook reported net income fell to $379 million for the year ended March 31, significantly below analyst estimates compiled by Bloomberg and 46 percent lower than the year-before figure. Hong Kong retail sales fell 12 percent in the first quarter, with jewelry and watch sales plummeting almost double that, contributing to Chow Tai Fook’s lowest profit since 2010.
Chow Tai Fook’s retail network expanded to 2,319 sales locations as of the end of March, including a net opening of 62 in the fiscal year, according to a company statement. Of these, 2,179 locations are in mainland China, with the remainder in other markets, which the jeweler doesn’t break down into specific countries. It opened six sales locations in Taiwan and South Korea during the period. Mainland China contributed 60 percent of Chow Tai Fook’s sales in fiscal 2016, with the remainder from Hong Kong, Macau, and other markets, which the retailer doesn’t break down.
Chow Tai Fook is chasing Chinese tourist dollars overseas as the economic slowdown in China crimps luxury sales at the world’s largest publicly traded jewelry chain. The jeweler was hurt by weak retail sentiment in Hong Kong and Macau, and a decline in tourism, especially from mainland China due to the stronger U.S. dollar. Mainland Chinese tourists to Hong Kong, who accounted for more than 70 percent of the total in the first four months this year, have dropped 13 percent in the period compared to a year ago, according to the city’s tourism board. By contrast, retail sales outside of its traditional bases, including newer markets such as the U.S., Taiwan and South Korea, grew 26 percent in the fiscal year ending 2016. Chow Tai Fook’s strategy is to “expand footprint in overseas market to grasp opportunities from the booming Chinese outbound tourism,” it said. “The increasingly affluent and sophisticated Chinese consumers continue to look for more personalized products and shopping experience. Lifestyle and leisure spending becomes the trend, with strong outbound tourism boosting the consumption abroad.”