Xin Jing Bao·2025-06-18 12:26Core Viewpoint - Chow Tai Fook Jewellery Group experienced a decline in both revenue and net profit for the fiscal year 2025, attributed to market pressures and strategic store closures [1][5][10]. Financial Performance - For the fiscal year 2025, Chow Tai Fook reported a revenue of HKD 89.656 billion, a decrease of 17.5% year-on-year [1]. - The operating profit increased by 9.8% to HKD 14.746 billion, but the net profit attributable to shareholders fell by 9.0% to HKD 5.916 billion [1]. - The decline in net profit was significantly impacted by a fair value loss of HKD 6.18 billion due to fluctuations in gold prices [1]. Market Strategy and Store Closures - Chow Tai Fook closed 896 stores in mainland China during the fiscal year 2025 as part of a strategic transformation to enhance efficiency [2][5]. - The company shifted focus towards opening experience stores and increasing the design premium of gold products [2]. - Despite the closures, the company had a total of 6,274 retail stores in mainland China as of March 31, 2025 [6][8]. Competitive Landscape - Chow Tai Fook's market position is under threat as it was surpassed in market capitalization by Lao Pu Gold, which has only 36 stores but a market value of HKD 152.2 billion compared to Chow Tai Fook's HKD 127 billion [2][10][11]. - The competitive environment is intensifying with other brands like Chow Shing Fook and Chao Hong Ji expanding their store networks while Chow Tai Fook is closing stores [11]. Brand Development and Challenges - The company is facing challenges in its "individual brand" segment, which includes brands like ENZO and MONOLOGUE, as the number of stores has significantly decreased [9]. - The departure of key executives, including the recent resignation of Liao Zhenwei, adds uncertainty to the future of these brands [7][9]. - The sales of non-gold jewelry have been declining, with same-store sales dropping by 22.9% [9]. Future Outlook - Chow Tai Fook plans to issue HKD 8.8 billion in convertible bonds to fund expansion in gold jewelry, store upgrades, and global initiatives [2]. - The company aims to enhance its brand value proposition to adapt to changing market dynamics and consumer preferences [2][12].