HONG KONG — Leading jeweler Chow Tai Fook posted double-digit growth in profits and sales for the full year, buoyed by strong demand in mainland China. The company said Tuesday its net profit for the 12 months ended March 31 rose 79.2 percent to 6.34 billion Hong Kong dollars, or $817 million. Sales grew 61.4 percent to 56.6 billion Hong Kong dollars, or $7.29 billion. The Hong Kong dollar is pegged to the U.S. dollar. Still, comps indicate that business is starting to slow slightly on the mainland.
Same-store sales growth in China declined slightly in the latest fiscal year, increasing by 32 percent, compared with 35.2 percent in fiscal year before. Executives at a press conference here acknowledged the slowing trend but said the result was “still satisfactory.” Same-store sales in Hong Kong, Macau and Taiwan rose 48.4 percent. The company declined to give same store sales projections for the year ahead. Chow Tai Fook, which translates roughly as “great luck” in Cantonese, claims to be the biggest jeweler in mainland China, Hong Kong and Macau in terms of market share. The company said it plans to double its revenue within three years.
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“The jewelry market in China enjoys huge potential,” said Chow Tai Fook chairman Henry Cheng.
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Despite concerns about slowing Chinese economic growth, Cheng said he remains very optimistic. Since Chow Tai Fook’s initial public offering in December 2011, the company’s share prices have declined by nearly 40 percent. Cheng acknowledged that weak market conditions and the economic environment have adversely affected the company’s share price but he emphasized that Chow Tai Fook’s business model is different from that of other jewelers. The market in mainland China is less affected by external macroeconomic factors than in Hong Kong, he reasoned. “We have an advantage because of our focus on China,” he said.
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Cheng, who is also chairman of New World Development, a Hong Kong conglomerate with interests in property, infrastructure, telecommunications and more, batted away multiple questions about his outlook on Hong Kong and Chinese politics.
About 80 percent of the Chow Tai Fook’s revenue comes from mainland China. The jeweler had 1,627 points of sale, of which 1,448 are in China, as of March 31. Chow Tai Fook said it is working on upgrading its brand positioning in tier one and two cities while expanding its network of self-operated stores in tier two, three and four cities. The jeweler targets to have 2,000 points of sale by the end of fiscal year 2014.
Sales of gold account for half of Chow Tai Fook’s total revenue, though executives said sales of jewelry, which has higher profit margins, has been increasing thanks to marketing campaigns. The company has been actively building up its inventory of fine jewels as part of its effort to upgrade its image.