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Sales fall 16 per cent for Chow Sang Sang Holdings

An upward surge in gold prices failed to stimulate consumer demand as usual, says jewellery group Chow Sang Sang Holdings International in releasing its unaudited interim results for the first six months this year.
It says the gold price shot up by more than 25 per cent, caused by uncertainties in the global economic and political environment “and Brexit, no less”.
Despite this, the group’s turnover fell 16 per cent to HK$7.801 billion (US$1005.8 million) for the period. Although operating profits decreased, a HK$246 million gain on the disposal of shares in Hong Kong Exchanges and Clearing last year was a more significant drag on the total profit figure.
Operating profit slipped by 14 per cent year-on-year to $482 million, with jewellery retail accounting for 88 per cent of the group’s turnover. Sales dropped 26 per cent in Hong Kong and Macau. Same-store sales slid 26 per cent.
As the gold price increased, the total weight of gold sold slipped by almost 30 per cent. Sales of gem-set jewellery has not reversed its downward trend.
During the period, two Hong Kong shops, one in Harbour City and one in Disneyland, were closed, and the lack of tourists was still affecting Macau.
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Mainland China turnover was steady at $3.744 billion, with a 5 per cent easing in same-store sales growth. With 16 stores opened during the first half, the retail network now covers 105 cities. Eight stores were closed because of poor performance. At the end of June, the group had 351 stores in China.
Gold sales also also down, with same-store sales growth dropping 13 per cent while gem-set jewellery maintained a positive momentum. Online sales continued to grow, accounting for 10 per cent of China sales. Gold products dominated the sales mix.
With store openings and 29 outlets refitted, capital expenditure came to RMB51 million (US$7.6 million).
Taiwan’s retail sector remained weak, and there was no significant change from the same period last year.
Precious metals wholesale turnover fell by 14 per cent to $868 million, and operating profit slid by $3 million.
Looking forward, the group says that overall it expects to reduce its amount of floor space in Hong Kong but continued to add new stores in China. It plans 22 openings in the second half, along with several refits and closings.
“Although the economy has slowed down, consumers are becoming more and more sophisticated. We see opportunities to grow via product and brand differentiation,” says the group.

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