As China’s economy continues to decline and the price of gold keeps rising, retail pressures on Chinese gold jewelry retailers are increasing. According to financial reports, Chow Tai Fook has recently closed 145 jewelry retail points in the mainland, while Lukfook Group has also closed 76 stores.
On October 22, Chow Tai Fook released its third quarter financial report for 2024, showing a 21% year-on-year decrease in retail value for the three months ending September 30. Within the quarter, same-store sales in mainland China’s directly operated and franchised stores dropped by 24.3% and 20.3% respectively compared to the same period, while 145 Chow Tai Fook jewelry retail points were closed in the mainland.
Chow Tai Fook explained that sales in Hong Kong and Macau were impacted by the shift in consumer behaviors and preferences due to summer vacations for local residents and changes in spending patterns of mainland tourists, resulting in a 30.8% decrease in same-store sales. Same-store sales in Hong Kong fell by 27.8% and in Macau by 40.2%. The company also noted that the continuously rising gold prices have been affecting consumer willingness to spend, which is a phenomenon seen across the industry.
Similarly, Lukfook Group’s latest financial report for the second quarter of the 2025 fiscal year showed an overall 16% drop in retail value compared to the previous period, with a 35% decrease in same-store sales and a net reduction of 76 stores.
Guosen Securities pointed out that the current high gold prices, coupled with a weaker consumption environment, have led residents to have lower willingness to spend on expensive jewelry. The institution also added that the overall consumption environment is more volatile currently, with weaker consumer confidence.
Looking at the stock performance, both Chow Tai Fook and Lukfook Jewelry have seen their stock prices decline by more than 16% and 10% respectively over the past month.
The significant drop in retail sales and widespread store closures have clearly put pressure on Chow Tai Fook’s performance. The company expects group revenue for the first half of the 2025 fiscal year (April 1, 2024, to September 30, 2024) to decrease by around 18% to 22% compared to the same period last year, with net profit declining by approximately 42% to 46%.
In the third quarter of 2024, Chow Tai Fook saw a 21% year-on-year decrease in retail value, with same-store sales in mainland directly operated and franchised stores dropping by 24.3% and 20.3% respectively. Same-store sales in Hong Kong fell by 27.8%, and in Macau by 40.2%.
Lukfook Group’s latest report for the second quarter of the 2025 fiscal year (July 1, 2024, to September 30, 2024) showed a 25% year-on-year decline in overall retail revenue, with a 31% decrease in Hong Kong and Macau markets and a 9% drop in the mainland China market.
The group mentioned that the average international gold price (per ounce against the US dollar) rose by 29% during the reporting period, leading to weakened consumer sentiment due to high gold prices. As a result, same-store sales of gold products fell by 38%, while priced jewelry products saw a 24% decline.
According to statistics from the World Gold Council, China’s gold jewelry demand in the second quarter of 2024 hit its lowest level since 2009, reaching only 86 tons. In the first half of the year, Chinese gold jewelry consumption decreased by 18% to 270 tons. Gold jewelry consumption may continue to remain weak in the coming months.