Chow Tai Fook shines with gold

Hong Kong-based jeweller Chow Tai Fook said its net profit in the year to March 31 rose 32% as sales of gold products in China improved.

Net income grew to HK$7.3 billion (US$942 million) as revenue and overall same store sales increased 35% and 19%, respectively.

“The remarkable growth in gold products, coupled with the growth in both gem-set jewellery and platinum/karat gold products, validated our business strategy to ride on the robust volume growth of mass luxury jewellery and the gradual improvement in consumer confidence,” the company said.

During the 12 months, Chow Tai Fook added 241 new stores, taking its tally to 2,077. Going forward, it will open 200 new stores a year, mainly in China’s lower-tier cities.

Chow Tai Fook said, “Based on official statistics, jewellery demand in mainland China has been on the rise continuously and steadily for years. We believe this upward trend will continue and we are confident that our business will continue to benefit from the colossal market potential in mainland China, especially in the lower-tier inland cities where economic growth and resilience to macro-economic changes are both strong.”

The 85-year old jeweler has focused recently on expanding its presence in mainland China’s lower tier cities which enjoy higher economic growth and are more resilient to global economic fluctuations.

Chow Tai Fook is currently building a 221,000sqm “Jewellery Park” in Wuhan, Hubei, that will serve as a multi-functional, integrated platform combining jewellery production, logistics and distribution, sales exhibition and tourism, training, e-commerce and jewellery business support.

Separately, the company announced last month that it is buying US diamond jeweller Hearts on Fire for US$150 million.

Company chairman Henry Cheng Kar-shun said the proposed acquisition is in line with the group’s strategies tooptimise product mix and efforts to promote higher value products to match the spending profiles of consumers to encourage repeat customer purchase.

Hearts on Fire has 11 owned stores in the US and Taiwan and more than 500 shops-in-shops in 31 countries. Chow Tai Fook plans to open Hearts on Fire stores in Hong Kong and mainland China.