HK jeweller Chow Tai Fook posts 3.9 pct rise in FY profit

Chow Tai Fook Jewellery Group Ltd on Thursday reported a 3.9 percent rise in profit, buoyed by sales rebound in the second half of the year as consumer sentiment improved.

Chairman Henry Cheng said it's still a long way to a full-fledged recovery, and the company will pay attention to market development amid changes in retail landscape.

"As a long-term initiative, we are reaching out to business prospects in developing wholesale business in the U.S.," Cheng said in an earnings statement, adding the company will continue to optimise its retail network.

To tap the demand of Chinese customers overseas, China's largest jeweller by market value launched three point of sales (PoS) in Korea, Malaysia and the U.S. in the previous fiscal year that ended in March.

Net profit came in at HK$3.06 billion ($392.5 million) for the year ended in March, from HK$2.94 billion profit a year ago, snapping two consecutive years of decline. That matched HK$3.1 billion forecast by SmartEstimate.

Revenue for the 12-month period slipped 9.4 percent to HK$51.25 billion from HK$56.59 billion in the same period last year as lower purchases by mainland tourists continued to affect the sales volume.

Same-store sales of its jewellery business in mainland China fell 5.2 percent for the year, while that in Hong Kong and Macau plunged 12.4 percent.

Chow Tai Fook plans to launch 70-100 PoS in China this fiscal year, but may close five non-efficient stores in Hong Kong due to high rentals and feeble sales.

As of end-March, company's retail strength expanded to 2,381 PoS, including China, Hong Kong, Macau and Taiwan, compared with 2,319 in the year-ago period.

Analysts are holding positive views on the city's retail segment, aided by signs of improvement in the operating environment.

Last week, Hong Kong posted a second month of growth in its retail sales, rising 0.1 percent in value terms in April. Of which sales of jewellery and watches edged up 0.5 percent in value terms in the month.

Hong Kong's tourist arrivals in April rose 1.9 percent from a year earlier, according to Hong Kong Tourism Board.

However, some retailers remain conservative. Cartier owner Richemont had said in May that it was too early to say the worst was over in the Hong Kong market that has collapsed over the last 2-3 years.

Last month, British luxury brand Burberry reported 21 percent drop in full-year underlying pretax profit, hit by weak demand in cities, including Hong Kong.

Shares of Chow Tai Fook surged over 40 percent so far this year, outpacing an 18.5 percent rise in benchmark index.