Chow Tai Fook Sales Dip on Economic Slowdown

RAPAPORT... Chow Tai Fook followed a string of major retailers observing a slowdown in greater China as same-store sales fell in the three months that ended December 31. "A decline in same-store sales was recorded for both mainland China and Hong Kong and Macau markets in the third quarter amid uncertain macroeconomic environment," the jeweler said in a trading update Monday.Same-store sales - at locations open for more than a year - dropped 7% year on year in China and 6% in Hong Kong and Macau. Same-store sales of gold products fell 11% in China and by 6% in Hong Kong and Macau, while gem-set jewelry declined 5% and 8%, respectively.Other retailers have expressed similar caution about the region, with Cartier owner Richemont noting a slowdown in Hong Kong due to lower tourist spending resulting from a weaker yuan versus the Hong Kong dollar. Tech giants Apple and Alibaba also recently expressed concern about a decline in the region. Hong Kong's government this month noted that slower retail growth reflected more cautious consumption sentiment stemming from external uncertainties such as the US-China trade tensions and volatilities in the global financial markets. Chow Tai Fook saw lower sales volume but slightly better average prices due to a shift toward higher weights in its gold products, which account for approximately 60% of its total retail revenue. The average price of its gem-set jewelry fell 4% to HKD 6,600 ($841) in China and by 3% to HKD 11,500 ($1,466) in Hong Kong and Macau. The jeweler reported that total retail sales grew 1% in China, boosted by 259 new points of sale that opened in the country during the quarter, while overall sales in other markets slipped 1%.Image: Chow Tai Fook store in Tsim Sha Tsui, Hong Kong. (Chow Tai Fook)