Chow Tai Fook, HK 1929, with over 2,000 point of sales in Greater China, Hong Kong and Macao, reported a dramatic drop in same store sales from the prior quarter, showing a 26% drop in same store sales growth for the group vs. a prior quarter 15% drop.
This stunning drop was explained as follows: (from HK Filing)
|Outflow of consumption due to mainland travel.|
|Weakening consumer sentiment on luxury goods and slowdown of economic growth.|
|Declining visitation by mainland tourists.|
|Weak local consumer sentiment.|
Based on these results, the often quoted drive to a consumer-oriented economy has hit a major speed bump.
For those who haven’t heard of Chow Tai Fook, a comparison with Tiffany’s, TIF, gives some perspective, with similar US equivalent market caps, MC. (There are major differences between the two, with the majority of Chow Tai Fook’s sales in Mainland China, Hong Kong and Macao. Tiffany’s 2015 annual Asia Pacific Sales were 24% of total sales; >50% of that from Mainland China. Japan is reported separately, 13% for 2015.) No quarterly report has been issued for Tiffany’s but December‘s annual report was disappointing, with gap comparable sales down 5% for the Asia Pacific region & 6% in the Americas, where foreign tourists shop in the NY flagship store. These figures were for the whole year.
Chow Tai Fook has already dropped over 7% ytd but tomorrow should see a further price decline with a trailing p/e of 11.5% against negative growth. (Chow Tai Fook orange; HSI blue).