HONG KONG — Chow Tai Fook, the largest jewelry retailer in the world by market value, posted a 90 percent increase in net profit for the six-month period ended Sept. 30, boosted by strong sales of gold products and improved consumer sentiment in Mainland China.
The Hong Kong-based company posted net profit of 3.6 billion Hong Kong dollars, or $464.37 million, for the first half of the 2013/2014 fiscal year. Revenue rose 48.5 percent to 37.7 billion Hong Kong dollars, or $4.8 billion.
A slump in gold prices earlier this year sparked consumer demand for gold and gold jewelry, providing a sales boost for jewelers. Chow Tai Fook reported Tuesday that sales of gold jewelry made up 65.2 percent of total sales during the six-month period, up from 55.5 percent a year ago.
By contrast, sales of gem-set jewelry — which the company has been trying to play up the last few years — dipped, making up 17.6 percent of revenue, down from 22.7 percent a year ago.
Same-store sales improved during the six-month period,increasing by 33.2 percent, but growth was driven mostly by Hong Kong, Macau and Taiwan, which saw same-store sales increase by 47 percent. Same-store sales in Mainland China increased by 21.5 percent.
Chow Tai Fook executives said they still see growth ahead in Mainland China and pointed out that the strength in same-store sales in Hong Kong and Macau was mainly attributable to visitors from Mainland China taking advantage of lower taxes.
Looking forward, executives said they expect “steady growth” for the remainder of the fiscal year, with the mass luxury jewelry segment the key growth driver. The company has been promoting both its high-end luxury collections and lower-priced jewelry aimed at younger buyers.
Chow Tai Fook licensed some cartoon characters such as Angry Birds, Man of Steel and Hello Kitty and has been rolling out jewelry lines which executives said have been warmly received by younger consumers.
Executives also said they are “optimistic” about the growth potential in Mainland China and would continue their expansion in the country. Chow Tai Fook opened 118 points of sale during the period, bringing the total points of sale to 1,954 as of the end of September. The bulk of the openings were in third- and fourth-tier cities.
The company continues to target 2,000 points of sales and said it is also working on scaling up its e-commerce presence.