Chow Tai Fook Jewellery Group Ltd., the world’s largest listed jewelry chain by revenue, said full-year profit fell 25 percent as sales weakened in China and major markets such as Hong Kong and Macau.
Net income fell to HK$5.46 billion ($704 million) for the 12 months ended March from HK$7.27 billion a year earlier, Hong Kong-based Chow Tai Fook said Friday. That compared with the HK$5.9 billion average estimate of 23 analysts compiled by Bloomberg.
Jewelry sales fell 16 percent in China and 33 percent in Hong Kong and Macau, as Chinese shoppers cut back on luxury spending amid a slowing economy and the government’s austerity campaign. The jeweler plans to focus its expansion on the mainland by adding as many as 160 points of sales, while consolidating its retail network in the two cities.
“Profit contribution from mainland China exceeded those from Hong Kong and Macau for the first time and became our biggest profit booster,” Chow Tai Fook finance director Hamilton Cheng said on Friday. “This has proven that our business strategy in China over the past 10 years is right.”
Same-store-sales at outlets open at least a year fell 24 percent, Chow Tai Fook said. Revenue dropped to HK$64.28 billion, compared with the HK$66.3 billion average analyst estimate.
Shares of Chow Tai Fook fell 0.3 percent to close at HK$9.18 in Hong Kong before the announcement. The benchmark Hang Seng Index fell 1.1 percent.
Chow Tai Fook is seeking a 20 percent reduction in rent for some of its Hong Kong stores when contracts come up for renewal this year, as sales of luxury items plunged in the city, Managing Director Kent Wong said in an interview in May.
The company said in November it plans to open new stores outside its main Hong Kong and China markets, as overseas travel becomes increasingly popular for the Chinese.
— With assistance by Haixing Jin, and Billy Chan