Chow Tai Fook Says Demand for Cheapest Trinkets Boosting Margins

Chow Tai Fook Jewelry Group Ltd., a Hong Kong-based chain with more revenue than Tiffany & Co., said demand for its cheapest items is growing among young consumers, helping boost earnings as the global economy struggles.

Over the past six months, “our average selling price is getting lower but we’re selling more pieces,” Alan Chan, director of group branding, said this week in an interview in Paris. Revenue is improving, he said, citing a pickup in demand for semi-precious stones. “This is better for margins.”

Young consumers are buying more jewelry, either as gifts for themselves or friends, attracted by Chow Tai Fook’s more colorful lower-value items, he said, drawing a contrast with business-gift giving or buying trinkets as an investment. Previously, gold accounted for about 55 percent of the retailer’s sales, Chan said.

“We are very excited because if we can sell more jewelry items, whether diamond, pearls or precious stones, it’s better for us,” the executive said March 5 at an event to promote Chinese fashion, art, dance and photography during Paris fashion week.

Luxury-goods companies are increasingly focused on expansion in jewelry as a way to lure more customers. Swatch Group AG this year bought Harry Winston Diamond Corp.’s watch and jewelry unit, and PPR SA and Prada SpA are said to be among companies interested in acquiring Pomellato SpA, an Italian company known for its stacking rings.

E-commerce sales grew three times as fast in the first six months of the fiscal year compared to the same period a year earlier, Chan said. The pace of growth via the channel has been the same in the second half of the year ending March 31, he said.

Fiscal fourth-quarter sales are in line with expectations, Chan also said. The jeweler, controlled by Hong Kong billionaire Cheng Yu Tung, said in January it expects revenue growth in the period to be stable.