Chow Tai Fook plots new grounds as tourists range further

A Chow Tai Fook shop in Yichang, Hubei province. The company is the world's largest jewelry retailer, with more than 2,000 outlets around the globe. About 90 percent of its stores are in more than 400 cities on the Chinese mainland. [Liu Junfeng / for China Daily]

Chow Tai Fook Jewelry Group Ltd plans to open new stores outside its main markets of Hong Kong and the Chinese mainland, as it chases new customers.

"Overseas travel is increasingly popular among the mainland Chinese, and means more and more of their shopping budgets are spent in new tourist destinations outside our major markets," the world's largest listed jewelry chain said in a statement to the Hong Kong Stock Exchange on Tuesday.

Chow Tai Fook plans to double its number of points of sale, including concessionaires and stand-alone outlets, in the next 10 years. Stores in tourist hot spots outside the mainland and Hong Kong will also be its target "to capture the spending power of the affluent outbound mainland Chinese tourists," it said.

The expansion plan comes as the jeweler said street protests held near its Hong Kong stores curtailed mainland tourists. Travelers splurged the most on tax-free shopping last year, accounting for 27 percent of spending, according to a study by tax-refund points operator Global Blue.

Chow Tai Fook has said sales at stores open at least a year plunged 24 percent in October as the demonstrations disrupted businesses at some of its outlets nearby.

Sales of the stores in the areas are expected to improve after police cleared some protesters, said Chairman Henry Cheng in Hong Kong on Tuesday.

Total revenue dropped 22 percent with that from the mainland falling 12 percent and from Hong Kong and other markets down 33 percent. Hong Kong sales are expected to decline by a single-digit level in the full year on weakened consumer sentiment, said Spencer Leung, an analyst at UBS AG, citing the company's management.

"We remain confident of a gradual improvement in the mainland operation, but consumer sentiment in Hong Kong could remain weak," Leung said, maintaining a neutral rating on the company.

Sales of gold products, which accounted for 50 percent of the group's total, dropped 41 percent to HK$14.5 billion ($1.87 billion) during the first half. The plunge in global bullion prices in the same six-month period caused a "gold rush" that created an exceptionally high base, the company said in its statement.

Chow Tai Fook makes almost 60 percent of revenue from stores in the mainland.

President Xi Jinping's clampdown on banquets and gifts by officials since he took over as the general secretary of the Communist Party of China in November 2012 has dented sale of luxury goods.

Chow Tai Fook, which is celebrating its 85th anniversary this year, had 2,191 points of sales as of end-September after adding 114 in the six-month period.

Founded in 1929 in the southern city of Guangzhou, the jeweler was named after founder Chow Chi-yuen. "Tai Fook" means "big blessing" in Chinese.