Chow Tai Fook, the world’s largest publicly traded jewelry chain, is warning that the jewelry market remains challenging even though it expects a decline in sales to ease off in the second half of this year. It also hopes to benefit from easier comparisons in the second half with the same period of 2015. “This year is still a challenge because the volatile global economy is affecting buying sentiment as a whole,” Kent Wong, the managing director of Chow Tai Fook Jewellery Group, told Rapaport News. “But, we can forecast an improvement in the second half [of calendar 2016] because sales dropped a lot last year so we’re working off a lower base.”
Its revenue dropped 12 percent to $7.3 billion while profit slumped 46 percent to $384 million in the fiscal year that ended March 31. In China, sales fell 13 percent in the first quarter of the current fiscal year, while in Hong Kong and Macau the decline was even more severe – with a 22 percent fall. Its store expansion program was also hit hard by the slowdown, with the jeweller opening a net 62 stores in fiscal 2016, compared with an average of 150 to 200 annually in previous years. The company operates more than 2,300 points of sale across China, Hong Kong and Macau. “Consumption [patterns] have changed and the short term is still volatile,” he explained. “But we are optimistic about China. It’s still a huge market for diamond consumption.”
Wong said that Chow Tai Fook’s chain-store model remains its core business, but the company is looking at ways of offering a more personalized product to millennials. He also admitted that retailers have to improve their performance since consumers today are more educated about diamonds and jewelry than in the past, helped by easy access to online research. In this respect, Wong spoke about changing consumer behavior and buying patterns. He said Chow Tai Fook was looking at how to develop stronger tools to sell online, in particular via mobile devices.