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 June 2024 (the “First Quarter”, or the “Quarter” or “1QFY2025”).
1QFY2025 Impacted by Macro Externalities
Macro challenges continued to impact consumers’ spending alongside gold price volatility at high levels. In Mainland China (“the Mainland”), Same Store Sales (“SSS”) of self-operated stores and franchised stores declined by 26.4% and 19.1% respectively year-on-year during the Quarter, due to near-term slowdown in demand which is an industry-wide phenomenon.
In Hong Kong and Macau, business during the Quarter was impacted by the slowdown in jewellery consumption amid the elevated gold price, local outbound travelling and Mainland tourists’ evolving change in spending pattern and preference. SSS in Hong Kong and Macau decreased by 30.8% year-on-year. SSS declined by 27.4% for Hong Kong while Macau was down by 41.3%.
It was encouraging to observe e-commerce RSV increase 2.4% during the Quarter. It contributed to 5.8% of Mainland RSV during the Quarter, or 13.8% by volume. The Group will continue to enhance digital customer engagement and marketing on social media and stay agile in product planning when targeting online consumers to suit their spending patterns.
Improved Gold Product Mix and Steady Growth of ASP across All Product Categories
The Group observed positive results from the effective mitigation of industry-wide business challenges with a focus on pricing strategy from weight-based to fixed pricing. Fixed price gold products, which feature a modern and exquisite design aesthetic coupled with meticulous craftsmanship, have been highly appreciated by customers. As a result, fixed price mix in gold product RSV in the Mainland increased significantly to approximately 16% this Quarter, compared to around 6% in the same period last year, with its RSV growing by over 100% year-on-year. This partially offset the near-term slowdown in gold demand due to elevated gold prices and validates the Group’s approach towards higher value growth and focus on earnings quality.
It was highly encouraging to witness the positive impact and receptiveness of the brand transformation with the newly launched signature CTF Rouge Collection since its launch in April. This is one of our key fixed price collections.
The Same Store Average Selling Price (“ASP”) of gold jewellery and products category stayed resilient during the Quarter. In the Mainland, ASP ascended to HK$6,200 (1QFY2024: HK$5,400). In Hong Kong and Macau, its ASP rose to HK$8,900 (1QFY2024: HK$8,400).
Consumption of gem-set jewellery is more discretionary in nature and hence, more muted under current market conditions. ASP of gem-set jewellery increased to HK$8,600 (1QFY2024: HK$7,800) in the Mainland, while that of Hong Kong and Macau was HK$16,400 (1QFY2024: HK$16,700).
Optimising Retail Network Management for Long-Term Positive Impact
In regard to the Group’s retail network management, current priorities are to maximise overall financial health of the point-of-sales (“POS”) portfolio, with a focus on store productivity and profitability to sustain market leadership. During the Quarter, the Group optimised its retail network and net closed 91 CHOW TAI FOOK JEWELLERY POS in Mainland China.
Over half of the Group’s total stores in the Mainland were opened in the last 2-4 years. The Group is confident that the gradual maturity of these stores, together with ongoing network optimisation plans, will generate an uplift to topline and operating leverage, boosting overall profitability.
Business Outlook
The Group is on track with its brand transformation journey to elevate brand desirability, reinforce its leading brand positioning and deliver higher value growth. The Group also continues to execute disciplined cost management and prudent capital management.
The Group shall also stay nimble and prepared with financial and operational resources, and pay close attention to consumers’ spending to calibrate the overall growth strategy accordingly. The Group will also continue to diligently execute its five strategic priorities, which include brand transformation, product optimisation, accelerated digitalisation, operational efficiency and talent cultivation, to reinforce market leadership and identify business opportunities in existing and new markets.