Chow Tai Fook Jewellery Group Ltd’s retail sales in the first two months of the year suffered double-digit losses as majority of its stores in China and Hong Kong were temporarily closed due to the Covid-19 outbreak.
The company’s unaudited key operational data ending February 29 showed that sales in China plunged 42 per cent while those in Hong Kong and Macau were down 60 per cent.
Sales of gem-set jewellery pieces and gold products in China dropped 50 per cent and 53 per cent, respectively. Hong Kong and Macau also saw a 57 per cent decline in gem-set jewellery sales while demand for gold items fell 61 per cent.
“In response to the measures of local governments in containing the spread of Covid-19 virus, majority of our points of sale (POS) in China were temporarily closed since late January 2020, and in Hong Kong and Macau from early February,” revealed Chow Tai Fook. “Business in both markets were inevitably affected during the period.”
As of February 20, majority of the retailer’s POS have resumed operations – approximately 70 per cent in China and 64 per cent in Hong Kong and Macau.
Online sales in China meanwhile dropped 24 per cent year-on-year while volume decreased by 36 per cent.
Chow Tai Fook’s manufacturing facility in Wuhan, China – the ground zero of the outbreak – remains temporarily closed. The Wuhan factory produces mainly mass luxury products, contributing about 15 per cent to 20 per cent of the group’s jewellery output.
Production of such items has been momentarily allocated to the group’s Shunde and Shenzhen facilities.
Inventories, which were replenished before Chinese New Year, are likely to remain high in the short term owing to dwindling demand, added Chow Tai Fook.