2025-11-25 08:31Financial Performance - Chow Tai Fook Jewellery Group reported interim results for the six months ending September 30, 2025, with a focus on financial performance and operational highlights [3]. - The Group's revenue for the period reached HKD 20.5 billion, representing a year-on-year increase of 12% [27]. - Operating profit for the same period was HK$6,823 million, with a year-on-year growth of +0.7% [31]. - Total revenue for the first half of FY2026 reached HK$38,986 million, with an operating profit of HK$6,823 million, resulting in a profit margin of 17.5% [46]. - The Group's solid recovery trajectory reinforces confidence in sustaining growth through the second half of FY2026 [29]. - Profit attributable to shareholders remained flat in 1HFY2026 due to losses from the revaluation of gold loan contracts amid gold price volatility [133][135]. - The gross profit margin contracted by 90 basis points to 30.5% in 1HFY2026, primarily due to a decline in retail margins from lower gold price appreciation [140]. Operational Highlights - The number of retail outlets increased to 3,200 globally, with a 15% growth in store count compared to the same period last year [27]. - Same Store Sales growth turned positive in the Chinese Mainland and Hong Kong and Macau, indicating effective store optimisation strategies [29]. - The total number of employees as of September 30, 2025, was over 24,700, with 82.3% based in the Chinese Mainland [37]. - The Group opened 8 new image stores by September 30, 2025, which consistently delivered higher productivity than the average store in the same districts [116][118]. - The company opened 57 new CHOW TAI FOOK JEWELLERY stores during 1HFY2026 as part of its strategic expansion [194]. E-commerce and Digitalization - E-commerce sales accounted for 25% of total revenue, reflecting a significant shift towards online shopping [27]. - E-commerce business in Mainland China saw a 27.6% year-on-year increase in retail sales value (RSV) during 1HFY2026, with CTFMall and Douyin both exceeding 40% growth [95]. - Livestreaming channels accounted for 17.6% of online sales RSV in 1HFY2026, indicating a significant contribution to overall revenue [95]. - E-commerce sales in Hong Kong and Macau surged by 138.3% in the first half of FY2026, reflecting a strong shift towards online shopping [106]. Product Development and Innovation - The Group plans to launch a new line of sustainable jewellery products in early 2026, aiming to capture the growing demand for eco-friendly options [27]. - The Group launched its first High Jewellery Collection "Timeless Harmony" in June, marking a significant milestone in brand transformation [29]. - The launch of the "Timeless Harmony" High Jewellery Collection in June 2025 resulted in nearly 200 pieces sold during the launch event in Hangzhou, indicating strong demand from high-net-worth clients [65]. - The T•MARK diamond brand, launched in 2016, utilizes patented nano-inscription technology to enhance transparency in diamond sourcing [80]. - The T•MARK personalisation service will expand to include engraving images by FY2026, adding emotional value to jewellery pieces [80]. Market Expansion and Strategic Initiatives - Chow Tai Fook aims to strengthen its brand presence in international markets, particularly in Southeast Asia and North America, as part of its strategic expansion plan [27]. - The Group plans to continue launching new image stores in international markets, focusing on premium locations across Oceania and Canada in the second half of FY2026 [109]. - The Group is actively exploring new high-potential territories for sustainable growth, targeting markets with long-term prospects beyond Southeast Asia [109]. - The company is focused on brand transformation, enhancing brand desirability, and reinforcing market leadership through new image stores and upgrades [48]. Sales Performance - Same Store Sales Growth (SSSG) in the Chinese Mainland was 2.6%, while Hong Kong and Macau achieved 4.4%, driven by strong demand for fixed-price jewellery and weight-based gold jewellery [44]. - Retail sales volume in the Chinese Mainland was 10,724,000 units in 2023, with a forecasted decline to 6,453,000 units in 2025 [42]. - Total sales from signature collections reached HK$3.4 billion in 1HFY2026, a significant increase from HK$2.3 billion in the same period last year [70]. - The average selling price (ASP) of fixed-price gold jewellery rose to HK$5,500 in 1HFY2026, up from HK$4,400 in 1HFY2025 [196]. Financial Ratios and Cost Management - Gross profit margin improved to 30%, up from 28% in the previous year, indicating enhanced operational efficiency [27]. - The SG&A ratio improved by 120 basis points to 14.0%, reflecting the Group's focus on operational efficiency and financial resilience [115]. - SG&A expenses decreased by 8.8% to HK$5,453 million, with the SG&A ratio decreasing by 120 basis points to 14.0% in 1HFY2026 [152]. - The average number of employees decreased by 6.7% year-on-year to 17,760 [168]. Challenges and Risks - Current liabilities increased from HK$51,022 million in 2022 to HK$57,520 million in 2024 [40]. - The net gearing ratio increased significantly from 27.6% in 2022 to 78.2% in 2024 [40]. - Revenue in the Chinese Mainland decreased by 2.5% to HK$32,194 million in 1HFY2026, with wholesale revenue declining by 10.2% due to network rationalisation [155].