Hong Kong-based Chow Tai Fook Jewellery Group Ltd is still among the world’s top 10 luxury goods companies, earning US$8.29 billion in revenues in financial year 2014, data from the 2016 Global Powers of Luxury Goods report showed.
The report, released by global business consultancy firm Deloitte, examined the 100 largest luxury goods companies globally based on the consolidated sales of luxury goods during the period in review, which the company defined as financial years ending within the 12 months to June 30, 2015.
Chow Tai Fook ranked seventh from fourth in the 2015 Global Powers of Luxury Goods report. Other major Chinese luxury jewellers, Lao Feng Xiang Co Ltd and Chow Sang Sang Holdings International Ltd, both retained their top 25 positions in the 2016 edition.
According to the report, the combined fall in luxury goods sales among Chinese and Hong Kong companies was 6.8 percent in 2014, significantly worse than all other countries, but their compound annual growth rate between 2012 and 2014 was the highest, at 11.8 percent.
“This apparent contradiction is due to the exceptionally high level of sales growth achieved in 2013 (33.4 percent growth), which was caused mainly by a ‘gold rush’ into purchases of jewellery following a slump in the international gold price in 2013,” it added.
Customer demand for gold products gradually normalised during 2014, and Chow Tai Fook saw a reduction in the rate of decline in sales. Despite this challenging year, the composite net profit margin for China- and Hong Kong-based companies improved slightly from 2013, to 8.9 percent. Chow Tai Fook commented that the change in product mix away from gold to higher-margin gem-set jewellery helped their profit margins improve, the report said.
According to the report, the world’s 100 largest luxury goods companies generated total sales of US$222 billion in financial year 2014, 3.6 percent higher year-on-year.
“The global luxury goods sector is expected to grow more slowly in 2016, at a rate many retailers may find disappointing. The growth rate is slowing in important markets such as China and Russia, although some markets continue to perform well and there are pockets of opportunity across the globe,” it said. “India and Mexico for example are growing quickly, and the Middle East offers further growth potential.”
The study also cited a shift in the luxury path-to-purchase. Empowered by social networks and digital devices, luxury goods consumers are dictating increasingly when, where and how they engage with luxury brands. They have become both “critics and creators,” demanding a more personalised luxury experience, and expect to be given the opportunity to shape the products and services they consume, the report said.
[Source:- jewellerynewsasia]