- Shares fall as much as 4.7 percent in Hong Kong trading
- Lunar New Year sales outlook challenging: managing director
Chow Tai Fook Jewellery Group Ltd. fell by the most in more than three weeks after it reported same-store sales in Hong Kong and Macau plunged 23 percent in the final three months of 2015 as fewer mainland Chinese tourists visited the two cities.
Shares of the world’s largest listed jewelry chain fell as much as 4.7 percent to HK$4.50 in Hong Kong trading, the biggest intraday decline since Dec. 21. The benchmark Hang Seng Index retreated 2.4 percent.
China’s economic slowdown and campaigns against graft and extravagance have hurt luxury retailers in Hong Kong and Macau, as Chinese tourists avoided those cities. The operating environment in China as well as sales outlook for the Lunar New Year holidays in February remain challenging, Chow Tai Fook Managing Director Kent Wong told a briefing Friday.
Mainland Chinese tourists to Hong Kong, who accounted for more than 70 percent of the total in November, have dropped 16 percent in the month, according to the city’s tourism board.
Same-store sales, for outlets open at least a year, fell 6 percent for those in mainland China, bringing the total decline to 15 percent for the fiscal third quarter ending December, Chow Tai Fook said in a statement Friday. The retail sales value for all of the company’s outlets slumped 11 percent in the period, it added.
“The retail jewelry industry is now in a consolidation stage after the rapid growth in the past decade,” said Wong, adding the company will focus on cost-cuts in the rest of the current fiscal year ending March. “What we can do now is to better control cost structure on both rentals and staff costs, while expanding our high-end product lines.”
Chow Tai Fook in November declared its first-ever special dividend even as it posted the steepest decline in semi-annual profit since it went public, after its shares fell to about 70 percent before its offer price since its 2011 share listing.
The retailer of gems and watches has said it will shut outlets that do not perform well, but doesn’t plan to dismiss workers. Still, the number of employees may fall further after it dropped 8 percent in the first half, reducing staff costs by 13 percent, Wong said Friday.