Chow Sang Sang’s revenue slumped and profit tumbled in the first half because of weaker consumer sentiment and a drop in tourist spending in Hong Kong.
Revenue slid 16 percent to $1 billion (HKD 7.8 billion) in the six months that ended June 30, the Hong Kong-based company reported. Jewellery retail sales, which constitute 88 percent of group revenue, also dropped 16 percent to $885.9 million (HKD 6.87 billion).
The group’s Hong Kong and Macau business suffered the most from the downturn, with sales diving 26 percent. The company does not expect the environment to improve this year and will control inventory and reduce Hong Kong floor space in line with this outlook. By contrast, the retailer plans to open 22 new stores in mainland China, where trading has declined albeit at a slower pace.
“Continued softness in the property markets and the lack of momentum in the stock markets in both Hong Kong and China kept consumer sentiment in check,” the retailer said. “A strong Hong Kong dollar made Hong Kong a more expensive place to visit, especially for mainland visitors.”
Profit plummeted 50 percent to $46.9 million, dragged down significantly by the base effect of a $31.7 million gain recorded from a disposal of shares in Hong Kong Exchanges and Clearing Limited in 2015.
Chow Sang Sang also said a surge in the price of gold of more than 25 percent did not significantly boost consumer demand, despite such hikes having that effect in recent years.