Chow Tai Fook Takes Q4 Sales Hit Amid Uncertain Economic Environment

Retail and Consumer Confidence
16/01/2019 15:11

One of the bellwether jewelry brands and the largest jeweler in China, Chow Tai Fook, has reported that same-store-sales of gem-set jewelry in Q4 2018 declined by 5% in mainland China and 8% in Hong Kong and Macau “amid an uncertain macroeconomic environment.” This marks the first quarterly decline in two years for the company despite China’s lowering of its jewelry import tax by an average of 20.7 percent last summer, which was expected to bolster sales. That announcement came after jewelry products were re-categorized by the government as “general consumer goods” instead of “luxury” goods, but that was before the US-China trade war ignited fears of a slowdown in China’s economy prompted by a contraction in Chinese exports. 

Same-store sales overall dropped 7% year over year in China and 6% in Hong Kong and Macau, while same-store sales of gold products fell 11% in China and by 6% in Hong Kong and Macau. Still, same store average selling price continued to exhibit a positive growth in both markets during the quarter. The average price of its gem-set jewelry fell 4% to HKD 6,600 ($841) in China and 3% to HKD 11,500 ($1,466) in Hong Kong and Macau. Retail sales value of e-commerce business in the mainland dropped by 7 percent year on year while volume recorded an increase of 12 percent. The sales contribution from mainland tourists improved to 47 percent as compared to 42 percent for the same period last year.

At the end of November, rthk.hk, citing figures from the Hong Kong government, reported that retail sales had expanded at their slowest pace since June 2017, growing by just 1.4 percent in November when compared to same period in the previous year, while sales had grown by nearly 10 percent during the first eleven months of 2018. They also noted that while sales of medicines and cosmetics grew 10 percent during the period, the increase was offset by falls in big-ticket items such as jewelry, watches and vehicles. "The government said the moderation in overall sales reflected more cautious consumption sentiment in the face of various external uncertainties such as China-US trade tensions and the volatility in global financial markets."