Editor’s Note
**Editor’s Note:**
Chow Tai Fook’s sharp store closures and sales decline underscore the mounting pressures on the jewelry sector amid macroeconomic headwinds and record gold prices. The company’s struggles in mainland China, Hong Kong, and Macau reflect shifting consumer behaviors and tourism patterns, signaling a broader industry recalibration.
Chinese jewelry giant Chow Tai Fook recently released its performance data showing that in the first half of 2024, the group reduced its jewelry stores in mainland China by 180, with sales plummeting by 30.8%. However, Chow Tai Fook is not the only one closing a large number of stores this year. Chow Tai Fook’s management explained that this is mainly due to ongoing macroeconomic challenges and the sustained high gold prices. The decline in mainland business is attributed to a recent slowdown in jewelry demand. The decline in business in Hong Kong and Macau is influenced by multiple factors, including rising gold prices, outbound tourism from Hong Kong, and evolving consumption patterns and preferences of mainland Chinese tourists.
Since the beginning of 2024, Chow Tai Fook Jewelry’s stock price has fallen by a cumulative 36%. From the start of 2023 to the present, the stock price has dropped nearly 50%, with its market value estimated to have evaporated by approximately 80 billion Hong Kong dollars (about 335.8 billion New Taiwan Dollars).
According to Chinese financial media reports, Chow Tai Fook Jewelry Group Limited (referred to as ‘Chow Tai Fook’) released operational data on July 24, showing that its overall retail value from April to June this year fell by 20% compared to the same period last year. Among this, the retail value in the mainland China market decreased by 19%, while the Hong Kong and Macau markets saw a 29% decline.
Currently, gold prices have risen to 750 RMB (approximately 3,385 NTD) per gram, yet ‘Chow Tai Fook’ stores are shrinking. Data shows that in the second quarter of this year, sales at Chow Tai Fook’s directly-operated stores and franchise stores in China fell by 26.4% and 19.1% year-on-year, respectively. In the Hong Kong and Macau markets, which are primarily directly-operated stores, Chow Tai Fook’s same-store sales plummeted by 30.8% year-on-year.
From the beginning of 2023 to the present, Chow Tai Fook Jewelry’s stock price has dropped nearly 50%, with its market value evaporating by about 80 billion Hong Kong dollars (approximately 335.8 billion NTD). (Photo provided by Chow Tai Fook)
In the second quarter of this year, gold jewelry and products, which had been highly profitable for Chow Tai Fook in mainland China in previous years, also showed negative growth, with sales down 18% year-on-year. Meanwhile, jewelry set with natural diamonds, platinum, and K-gold jewelry has been performing poorly for several years, continuing negative growth this quarter, with retail value falling 23.1% year-on-year.
This year, Chow Tai Fook is not the only one experiencing widespread store closures in the gold jewelry market. Another Chinese jewelry giant, Luk Fook Group, announced on July 19 that its overall retail value for the first quarter of fiscal 2024 fell by 18% year-on-year, and overall retail revenue decreased by 23% year-on-year. Its Luk Fook jewelry stores in the mainland market saw a net decrease of 108 stores. In the previous quarter, the number of jewelry stores in this market had increased by 3.
Chinese financial media reports that Zhu Guangyu, a senior expert in the Chinese jewelry industry, believes that if the macroeconomic environment continues to be sluggish and consumer purchasing power continues to decline, jewelry and gold enterprises may continue to adopt strategies of scaling down to cope with the pressure.
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