Chow Tai Fook Jewellery Delivers Strong Sales Growth in Second Quarter FY2024, On Track in Transition to Higher Value Growth
12 Oct 2023

Chow Tai Fook Jewellery Group Limited (“Chow Tai Fook Jewellery Group”, the “Group” or the “Company”; SEHK stock code: 1929), today announces certain unaudited key operational data of the Group for the three months ended 30 September 2023 (the “Second Quarter”, or the “Quarter” or “2QFY2024”).

Positive RSV Growth Driven by Continued Improvement in Mobility and Retail Activity

During 2QFY2024, mobility and retail activity continued to improve in the Mainland and Hong Kong and Macau. The Group’s RSV registered positive growth of 5.8% during the Quarter, driven by Hong Kong, Macau and other markets. RSV in the Mainland was stable with a slight increase of 0.6%, despite a higher base last year. According to the Hong Kong Tourism Board, the number of Mainland visitors in July 2023 reached about 70% of the pre-pandemic level and further jumped to over 80% in August 2023. Hence, the average daily customer traffic at the Group’s stores in Hong Kong and Macau increased significantly during the Quarter. The influx of Mainland tourists has been supportive to the business in Hong Kong, Macau and other markets, with RSV rising 54.1% during the Quarter, reaching approximately 77% of the corresponding FY2019 levels.

On SSS, Hong Kong and Macau registered an increase of 55.7% during the Quarter. SSS grew by 43.0% and 116.7% for Hong Kong and Macau respectively. SSS in the Mainland nonetheless dropped by 12.5% year-on-year during the Quarter due to the high base of comparison.

Resilient Jewellery Demand Evidenced during Festive and Holiday Periods

Despite current market conditions, the Mainland market has seen solid recovery in mobility and retail activity during festive and holiday periods. According to The Ministry of Culture and Tourism, the Mainland tourism market surpassed the pre-pandemic level during the National Day holiday period. Meanwhile, the Group continued to observe resilient jewellery consumption in the Mainland during Qixi and National Day holiday (25 September – 5 October). Sales were in-line with management’s expectations with teens RSV growth in the Mainland.

Centralised Marketing Efforts and Global Campaigns to Maximise Impact

The Group launched new designs for HUÁ Collection in July, marking the first-ever partnership with Shaanxi History Museum and Northwestern Polytechnical University. The teams spent 16 months collaborating closely to develop products that blend the traditional culture of the Tang Dynasty with contemporary innovation and design. The centralised marketing efforts and amplified global campaign ensured consistency and maximised impact and synergy across the Group’s channels. The HUÁ Collection received overwhelming support from the younger customers. This was evidenced most notably in Hong Kong and Macau where RSV recorded significant growth in excess of 450% during the Quarter, encouraged by the rebound of Mainland tourists.

Underpinned by the Group’s strategic priorities, it is expected that the enhanced product portfolio, new signature collections and the refreshed marketing campaigns will also provide strong impetus to the gem-set jewellery sales.

Sustained Momentum of Consumer Spending on Luxury and Gold Products

Building on the trend seen in the first quarter, the Group continues to observe a shift in consumer spending and mindset towards luxury and gold products. Consumers’ demand for gold jewellery remained solid despite the increase in gold price in the Mainland.

In Hong Kong and Macau, SSS of the gold jewellery and products category surged by 89.0%, benefitting from the Mainland tourist influx. Its Average Selling Price (“ASP”) also ascended to HK$8,700 (2QFY2023: HK$7,900). In the Mainland, SSS of the product category was down by 9.6% during the Quarter owing to high base of comparison. ASP was further elevated to HK$5,600 (2QFY2023: HK$5,200).

Amid the current macro environment, SSS of gem-set, platinum and k-gold jewellery category in Hong Kong and Macau decreased by 4.3% during the Quarter. In the Mainland, SSS of the product category declined by 27.7% whereas its RSV dropped 17.9% during the Quarter. The trend of Same Store ASP remained resilient, benefitting from the continued pricing strategy optimisation. In the Mainland, ASP was lifted to HK$8,200 (2QFY2023: HK$7,300), while that of Hong Kong and Macau was HK$16,900 (2QFY2023: HK$16,200).

Sustain Growth Trajectory through Execution of Five Strategic Priorities

Despite market uncertainties and externalities beyond our control, the Group adopts a bottom-up approach and focuses on the five strategic priorities to sustain our growth trajectory. Transitioning into a new phase of higher value growth, the Group will focus on enhancing earnings quality with margin expansion and improved returns to equity and capital.

The Group will be actively monitoring the dynamic and fast-evolving market conditions. Staying vigilant and nimble to the ground with the extensive network, the Group has the financial and operational resources to effectively calibrate resources to dial-up expansion as needed.