In recent development on July 24th, Chinese jewelry giant, Zhou Dafu, known as the “Jewelry King,” released its financial performance report with data up to June 30, 2024. The report revealed a significant slump in sales for the company, with a total of 180 jewelry stores closing in mainland China in just half a year. However, Zhou Dafu is not the only major player in the industry facing this challenge.
According to reports from financial and news outlets, Zhou Dafu Jewelry Group Co., Ltd. announced a 20.0% year-on-year decline in overall retail sales from April to June this year, with a notable 18.6% decrease in mainland China and a significant drop of 28.8% in the Hong Kong and Macau markets.
The same figures highlighted that same-store sales in mainland China for both directly operated and franchised Zhou Dafu jewelry stores fell by 26.4% and 19.1% respectively during the same quarter. Meanwhile, in the Hong Kong and Macau markets, where direct stores are prevalent, same-store sales for Zhou Dafu Jewelry plummeted by 30.8%.
The demand for traditional high-value items like gold jewelry, which had been driving significant profits for Zhou Dafu in mainland China in recent years, recorded an 18% decline year-on-year. Similarly, the sales of jewelry items like natural diamonds, platinum, and K gold, which have been underperforming in the market, continued to see negative growth, with retail sales dropping by 23.1% during the quarter.
Despite the current rise in gold prices reaching 750 yuan per gram, Zhou Dafu has been scaling back its operations.
Reports from the Daily Economic News indicated that in the first quarter of the fiscal year 2025, Zhou Dafu had opened 85 new jewelry stores in mainland China while closing 176, resulting in a net decrease of 91 stores. As of the end of June 2024, Zhou Dafu owned a total of 7,429 jewelry stores globally, including 7,284 in mainland China, 87 in Hong Kong and Macau, and 58 in other markets. In the previous quarter (January to March of this year), Zhou Dafu had a net decrease of 89 jewelry stores in mainland China. This staggering trend indicates a reduction of 180 jewelry stores in mainland China for Zhou Dafu in just half a year.
Since 2024 began, the stock price of Zhou Dafu Jewelry has seen a cumulative decline of 36%. Furthermore, from early 2023 to date, the stock price of Zhou Dafu Jewelry has plummeted by nearly 50%, leading to an estimated evaporation of about 80 billion Hong Kong dollars in market value.
Following the release of the first quarter financial report for the 2024/25 fiscal year, several brokerage firms, including UBS, Huaxi Securities, and Bank of America Securities, revised downward their target prices for Zhou Dafu Jewelry within the fiscal year. This adjustment caused a one-day drop in Zhou Dafu’s stock price, falling by 7.7% to 7.3 Hong Kong dollars and marking a new low since September 2020.
This year, the gold and jewelry market has witnessed widespread closures of stores, affecting not only Zhou Dafu but also other major players.
Another Chinese jewelry industry giant, Lao Feng Xiang Group, disclosed in a public announcement on July 19 that its overall retail sales for the first quarter of the 2025 fiscal year contracted by 18% year-on-year, with a 23% decline in total retail revenue. The number of Lao Feng Xiang jewelry stores in mainland China reduced by 108, contrasting with an addition of three stores in the preceding quarter.
Renowned Chinese jewelry industry expert Zhu Guangyu believes that if the macroeconomic environment continues to weaken and consumer purchasing power keeps declining, jewelry and gold companies may opt to further downsize their operations to address the mounting challenges.