Chow Tai Fook Jewellery Group Limited released its financial results for the six months ended September 30, 2019, reporting that overall Group revenue was stable at HK$ 29,533 million, boosted by the POS openings and steady Same Store Sales Growth (SSSG) of the Mainland China segment, which offset a sales slump in Hong Kong & Macau.

Giving a comparative picture of the performance in the two markets, the company said that SSSG in Mainland China was steady, inching up by 1.8% despite the dampened consumer demand due to a volatile macro backdrop and a surge in international gold price. However, Same Store Average Selling Price (ASP) recorded a robust increase during the period. On the other hand, the company attributed the decline of 27.5% in sales across HK & Macau to a tough base of comparison and sluggish business environment.

In terms of product categories, revenue dipped both for gem-set jewellery and gold products during the period. While the former fell from HK$ 5,608.7 million to HK$ 5,288.2 mn, the latter declined from HK$ 14,358.0 million to HK$ 12,886.1 mn over the six months. Revenue from platinum and karat gold products was virtually flat, while that from the wholesale business and the service income from franchisees showed some improvement.

The Group’s retail network expanded to 3,490 POS, with a net addition of 356 POS as at September 30, 2019. During 1HFY2020, the Group opened a net of 333 Chow Tai Fook Jewellery POS in Mainland China. As a result of leveraging franchisees to deepen the market penetration in lower tier and county level cities, approximately 55.0% of the net openings were located in Tier III, IV and other cities. Tier III, IV and other cities achieved a robust high‐teens RSV growth during the period, mainly driven by the new openings and a relatively stronger Same Store performance.

Backed by a 49.6% growth of gem‐set jewellery, e‐commerce business recorded a RSV growth of 9.7% in 1HFY2010, contributing to 4.9% of RSV and 14.1% of retail sales volume in Mainland China.  Average daily online traffic reached 487,000 unique visitors. The number of followers on official Sina Weibo, Tencent Weibo and WeChat accounts also increased to over 9.6 million.

Gross profit amounted to HK$ 8,147 million (1HFY2019: HK$ 8,529 million). Adjusted gross profit margin increased to 30.7% in 1HFY2020, thanks to the improvement in like‐for-like gross profit margin of gold products resulting from the surge of international gold price, the company reported.

Core operating profit surged by 18.0% year‐on‐year. Core operating profit margin increased to 11.9% benefitted from the adjusted gross profit margin improvement. The Group’s profit before taxation dropped by 19.2%, mainly impacted by the unrealised loss of gold loans of HK$917 million arising from the surge in international gold price during the period.

Chow Tai Fook Jewellery Group Chairman Dr. Henry Cheng remarked, “Over the past 90 years, our innovative spirit has steered us to weather storms and become a seasoned jewellery leader. With a wise strategy and meticulous execution as well as our industry know‐how, I am confident that we will pave the way for viable long‐term returns.”