HK jeweller Chow Tai Fook profit plummets, sees tough year ahead

Chow Tai Fook Jewellery Group Ltd, China's largest jeweller by market value, reported a 46 percent fall in full-year profit, hurt by weak consumer sentiment and a fall in tourist arrivals.

The Hong Kong-based jeweller, which has a strong presence in China, had warned in May that its full-year profit could be half of what it reported last year due to persistently weak consumer sentiment. Hedging losses and the sale of more gold items with lower profit margins also hurt profit.

Net profit fell to HK$2.94 billion ($378.5 million) for the year ended in March, the lowest yearly profit since its listing in December 2011. Revenue fell to HK$56.59 billion from HK$64.28 billion. It posted a profit of HK$5.46 billion in the year-ago period.

"We expect the market environment for the region to remain challenging in the year ahead," Chairman Henry Cheng said in a filing to the Hong Kong bourse on Tuesday.

Same-store sales of its jewellery business in mainland China fell 10.3 percent, while that of Hong Kong and Macau fell 21.7 percent.

Retail network including China, Hong Kong, Macau and Taiwan, expanded to 2,319 points of sales (POS) as of end March, 62 more from the previous year.

"The net store openings for this year will be similar to the year just passed," Managing Director Kent Wong said in a news conference.

Chow Tai Fook Jewellery has repeatedly warned of a weaker business environment and said in January that it would close some of its Hong Kong stores.

Last week, Hong Kong saw its retail sales falling for the 14th successive month in April, as a drop in tourists and weak local consumption deepened the pain for retailers in the city.

April sales of jewellery, watches, clocks and valuable gifts fell 16.6 percent in value terms, a 20th consecutive month of declines. Hong Kong tourist arrivals in April fell 2.1 percent from a year earlier.

$1 = 7.7675 Hong Kong dollars