Chow Tai Fook Sales Slump

RAPAPORT... Hong Kong-based jeweler Chow Tai Fook has reported adownward trend in sales across both mainland China and Hong Kong in the secondfiscal quarter. Same-store sales of gold products - at branches open for atleast 12 months - fell 15% year on year in mainland China for the period endingSeptember 30, and 49% in Hong Kong, the company said Tuesday. Same-store salesof gem-set jewelry also slumped, plunging 35% in Hong Kong, while remainingflat for the mainland. Overall same-store sales declined 7% in the mainlandcompared to the same period last year, and by 42% in Hong Kong. The "uncertain macro environment" and a global rise in goldprices affected sales during the quarter, the retailer explained. The circumstancesin Hong Kong and an unfavorable comparison with last year also impactedperformance in the municipality, it added. Pro-democracy protests in Hong Kong have hurt local retail businessessince June, with September seeing the steepest monthly decline in sales of jewelry,watches, clocks and other valuable gifts since records began, according togovernment data. "Despite the US-China trade conflicts and situation in HongKong, the group remains positive on the fundamentals of mainland China, andbelieves that the group will continue to be fueled by the steady growth of its mainlandChina segment," Chow Tai Fook said. In a separate warning, also issued Tuesday, Chow Tai Fook saidit expected its net profit for the first fiscal half to suffer due to an "unrealizedloss" - a decline in the value of an as-yet unsold asset - of HKD 800 millionto HKD 1 billion ($102 million to $127.5 million). That loss resulted from the gold-pricesurge, it noted. The retailer will publish its interim results for thesix-month period by the end of November. Image: A Chow Tai Fook store in Hong Kong. (Macokeninealsm)