Jeweller Chow Sang Sang Holdings will press ahead with its store expansion program in Mainland China after overcoming a challenging Hong Kong and Macau market last year.
Chow Sang Sang achieved a minimal 1 per cent drop in group sales last year, but jewellery sales slumped 20 per cent. Group profit attributable to shareholders rose 4 per cent, largely due to a one-off asset sale gain and to non-retailing activities, which account for just 12 per cent of its business.
The company says it plans to continue to open stores in the mainland at a rate of 40 per year as it sees strong potential there.
“Although the economy has slowed down, consumers are getting more and more sophisticated and we see opportunities for growth,” said chairman Vincent Chow Wing Shing in the company’s results filed this week.
In Hong Kong and Macau, he said, there are no immediate plans to close any stores, however “any shop-lease renewal will be scrutinised very carefully to see if the renewal made strategic and economic sense”.
“The year 2016 will be a challenging one, more so in Hong Kong and Macau than in Mainland China.”
Chow said that although there was no reduction in the number of visits to Hong Kong by mainlanders as compared to the prior year, spending by the visitors remained decidedly low-key throughout 2015. In the second half, the spending power of the visitors was weakened by both the slowing down of the economy in China and the downward slide of the Renminbi.
Chow Sang Sang’s group’s turnover for the year 2015 stood at HK$19.069 billion, slipping by HK$177 million or 1 per cent from the prior year. The disposal of some of its shares in Hong Kong Exchanges and Clearing resulted in a gain of HK$246 million. Including this amount, the group’s overall profit attributable to equity holders amounted to HK$1.13 billion, up 4 per cent.
Profit from jewellery retailing slumped 20 per cent to $1.007 billion. In Hong Kong, sales dropped 10 per cent, with same store sales falling 11 per cent. Although the total weight of gold sold maintained its level, turnover decreased by 8 per cent because of the fall in gold price.
During the year, two shops – one Chow Sang Sang and one Emphasis Jewellery – were closed. The watch section of two shops, in Tsuen Wan and Tuen Mun respectively, were upgraded to separate shops in the same malls.
“Macau was still suffering from a dearth of visitors,” said Chow. “Shops located in the shopping arcades fared worse than the main street shop.”
Lease renewals during the year resulted in some small savings but total rental expenditure went up 12 per cent.
In Mainland China, total turnover increased by 11 per cent to HK$7.689 billion. Same stores sales growth rose 6 per cent. Online sales rose 77 per cent.
At the end of the year, Chow Sang Sang had 343 shops located in 103 cities across the mainland, after opening 40 and closing 19.