Coronavirus Pummels Chow Tai Fook's Sales

RAPAPORT... Sales at Chow Tai Fook dropped 60% in Hong Kong and Macau and 42%in mainland China in the first two months of the year as stores shut for muchof the period."In response to the measures of local governments [to contain] the spread of [the] COVID-19 virus, the majority of our points of sale in mainland China were temporarily closed since late January 2020, and Hong Kong and Macau from early February," the jeweler said last week. "Businesses in both markets were inevitably affected during the period."Same-store sales - at locations open for at least a year - declined 59% in Hong Kong and Macau and 49% on the mainland. As a result, the Hong Kong-based retailer expects higher-than-usual inventory levels in the short term, as stocks built up before the Chinese New Year in anticipation of festive demand.Chow Tai Fook's retail network has slowly reopened, with around 70% of its points of sale in mainland China and 64% in Hong Kong and Macau operational as of February 29, it noted. Operations remain suspended until further notice at the company's factory in Wuhan, which mainly manufactures luxury gold products and accounts for about 15% to 20% of the group's total jewelry production. The company shifted the center's production to its facilities in Shunde and Shenzhen, which have gradually become operational again, it continued.Same-store sales of gem-set jewelry slumped 57% in Hong Kong and Macau and 50% on the mainland, the company added. Sales of gold products by the same measure decreased 61% in Hong Kong and Macau and slid 53% on the mainland.The e-commerce business saw a gentler decline, with sales down 24% in mainland China.The coronavirus has played havoc with the global jewelry trade, especially in regions where there have been large outbreaks. Belgium's exports of polished diamonds to Hong Kong plunged 94% year on year to $43.1 million in February, according to data from the Antwerp World Diamond Centre.Image: A Chow Tai Fook store in Hong Kong. (Shutterstock)