MD hopes lower comparisons will help end declines.
Chow Tai Fook cautioned the jewelry market environment remains challenging even as the company expects its sales slide to ease in the second half.
“This year is still a challenge because the volatile global economy is affecting buying sentiment as a whole,” Kent Wong, the managing director of Chow Tai Fook Jewellery Group, said in an interview with Rapaport News. “But, we can forecast an improvement in the second half [of calendar 2016] because sales dropped a lot last year so we’re working off a lower base.”
Chow Tai Fook’s revenue fell 12 percent to $7.3 billion (HKD 56.59 billion), while profit slumped 46 percent to $384 million (HKD 2.98 billion) in the fiscal year that ended March 31. Sales slid 13 percent in China and 22 percent in Hong Kong and Macau in the first quarter of the current fiscal year. The slowdown has hit the rate at which Chow Tai Fook is expanding, as it opened net 62 stores in fiscal 2016, compared with an average of 150 to 200 in previous years.
While Wong recognized that Chow Tai Fook’s chain-store model remains its core business, the company is looking at new opportunities to offer a more personalized product to millennials. Retailers have to up their game as customers are more educated, with easier access to online research relating to diamonds and jewelry than they did a decade ago, he explained.
Following a period of strong growth that prompted aggressive expansion across China in the last 10 years, Wong noted consumer behavior has changed along with their buying patterns. The company, which operates over 2,300 points of sale across China, Hong Kong and Macau, is exploring ways to develop stronger tools to sell online, in particular via mobile devices, Wong said.
“Consumption [patterns] have changed and the short term is still volatile,” he explained. “But we are optimistic about China. It’s still a huge market for diamond consumption. ”