HONG KONG — Chow Tai Fook warned Thursday its full-year profit for the year would halve, in the latest sign that Hong Kong’s retail sector has yet to hit bottom.
The Chinese jeweler is expecting a 40 to 50 percent drop in profit for the year ended March 31. The brand attributed the decline in revenue to weak consumer sentiment in Greater China and thinning gross profit margins due to higher sales of gold products.
Hong Kong retail sales in the first quarter declined by 12.5 percent from the year before, as numbers of mainland Chinese tourists, its main source of income, divert to other destinations for shopping.
Chow Tai Fook lately has been reaching to more premium and luxury consumer segments, most recently in April with an art-inspired fine jewelry collection. Executive director Adrian Cheng said at the launch of their ultraluxury collection that although 80 percent of the business rested on its mass lines, priced between 300 to 10,000 euros, $342 to $11,405, 20 percent of its business rested on VIPs who spend over 1.5 million Hong Kong dollars, or $193,000 in a single purchase.