Chow Tai Fook's retail sales growth drops in Q1 despite opening of 250 stores

Chow Tai Fook Jewellery Group's retail sales value grew by only 8.5% in Q1 2022, lower than that of the previous quarter of 31.1%. It has opened more than 250 stores in the country to expand its business.

In its latest statement, Chow Tai Fook said during Q1 2022, both Mainland China and Hong Kong and Macau recorded negative same store sales growth due to the resurgence of the pandemic and a tough base. Same store sales dropped by 11.3% year-on-year in the Mainland during the quarter, despite the fact that it was flat in the first two months of 2022. In Hong Kong and Macau, business was negatively impacted by the new wave of the pandemic in Hong Kong, with same store sales declining by 21.9%. Hong Kong registered a negative same store sales growth of 39% in Q1 2022, whereas Macau’s same store sales growth was 27.9% due to a recovering tourist spending and a stable local consumption.

In China, same store sales of gem-set, platinum and k-gold jewellery category stayed flat, yet its retail sales value increased by 15.8% during the quarter thanks to a healthy contribution from new openings. Same store sales of gem-set, platinum and k-gold jewellery category in Hong Kong and Macau dropped by 43.4% during the quarter.

Chow Tai Fook said it had also added a net of 255 points of sale in Mainland China during the quarter, including 267 net points of sale openings of Chow Tai Fook Jewellery (nine self-operated stores and 258 franchised stores). As of 31 March 2022, 73.5% of Chow Tai Fook Jewellery points of sale in the Mainland were in franchised format.

In Hong Kong, Macau, and other markets, the company closed one Chow Tai Fook Jewellery point of sale in Hong Kong while opened one Chow Tai Fook Jewellery and one Hearts on Fire point of sale in other markets during the quarter.

In its business plans announced last year,  Chow Tai Fook said retail plans for 2022 will emphasise on expansion in mainland China and smart retail, tapping into the tremendous opportunities arising from the economic recovery. In its virtual media day, the company said it was stepping up its ongoing efforts and capitalising on the increasing domestic demand in mainland China. It added that the rise in disposable income of residents in mainland China will help promote consumption upgrade, unleashing huge spending potential in lower-tiered and county-level cities.

Chow Tai Fook said it was also planning to penetrate further into the market by leveraging its franchisees’ local expertise and access. The group aims to have more than 7,000 points of sales by the financial year of 2025. As of 30 June 2021, the business had 4,850 points of sales in total. Chow Tai Fook added that the rapid development of new retail in mainland China and the rising demand for customised products have opened up great business potentials, and the business has created more customer touchpoints via smart retail applications.

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