Chow Tai Fook Jewellery Group reported a 20% year-on-year rise in revenue to HK$ 29,703 million (H1 FY2018: HK$ 24,754 million) during the six-month period ended September 30, 2018 on the back of improving consumer sentiment in Mainland China, Hong Kong and Macau, with the latter markets also benefitting from a recovery in tourist traffic.

The Group said that in the same period its gross profit amounted to HK$ 8,529 million (1HFY2018: HK$ 7,166 million). While adjusted gross profit margin was down by 60 bps to 28.1%, mainly due to a higher sales contribution from gold products and wholesales business, core operating profit surged by 24.7% year-on-year.

Same Store Sales Growth (SSSG) of Hong Kong and Macau shot up to 24.4%, bolstered by both vibrant Average Selling Price (ASP) and volume growth, while in Mainland China, it rose by 4.9%, primarily driven by an increase of ASP. 

Revenue from Mainland China rose by 20.6%, mainly due to more POS openings, especially franchised POS, with its share of Group revenue moving up to 60.7%. Revenue from Hong Kong, Macau and other markets registered a growth of 19.1%, supported by strong SSSG.

In terms of product category, gold products saw relatively stronger demand, triggered mainly by short-term price drops, while gem-set jewellery growth was strong in HK and Macau.

The jeweller said it opened a net of 237 POS, bringing the total number of POS to 2,822 as at 30 September 2018. In Mainland China, in order to gauge market potential in lower tier cities and shopping malls, net openings amounted to 233 POS in the six months, reaching 2,682 POS; while retail network footprint remained stable at 99 POS in Hong Kong and Macau. During the period, the Group also opened 4 POS in other markets including Korea, Japan, Malaysia and Singapore. 

A successful development of the Group’s multi-brand strategy was reflected in T MARK, the Group’s disruptive diamond brand recording an impressive Retail Sales Value (“RSV”) growth of 134.8% year-on-year in Mainland China and 156.7% year-on-year in Hong Kong and Macau. Sales of T MARK products accounted for 18.6% and 25.2% of the RSV of diamond products sold in Mainland China and Hong Kong and Macau, respectively.

Chow Tai Fook said that its e-commerce business recorded a RSV growth of 12.7% in the period, contributing to 5.1% of RSV and 14.0% of retail sales volume in Mainland China. Average daily online traffic reached 405,000 unique visitors.

Striking a note of caution, the jeweller said that escalating comparison base, rising US-China trade tensions and foreign exchange fluctuations could see a moderation in the growth momentum during the second half of FY 2019, though it remains cautiously optimistic about the prospects of the jewellery market in Greater China for the foreseeable future.

Group Chairman Dr. Henry Cheng remarked, “Growing in a time of change, the Group has always poised to inject vitality in people, products and operations through our persistent investment in innovation and technology that allows us to formulate and execute a winning customer experience strategy. At all events, we remain optimistic about the mid-to long-term prospects of the jewellery market, on the back of the continuing changes undergoing in Mainland China.”

Pic caption:   Chow Tai Fook Jewellery Group Executive Director, Strategic Investment, Adrian Cheng (centre) flanked by Managing Director, Kent Wong (left) and Executive Director, Finance and Operations, Hamilton Cheng (right) while announcing the interim results for FY2019