Zhou Dafu'S Plan To Open Stores In The Mainland Will Be Reduced Because Of Poor Performance.

As the jewelry industry continues to decline, Zhou Dafu is accelerating the integration of retail stores to control the structure of land rent and labor cost.

Huang Shaoji revealed that in the three quarter, Hong Kong and Macau eventually reduced 5-6 retail outlets, and the new stores in the mainland would also be reduced to 50-60 from 150-160 originally planned.

Data show that in the three quarter, Zhou Dafu opened 31 new retail outlets, including 28 retail outlets for jewelry and two watch retail outlets in the mainland, and 1 outlets in Hongkong, Macao and other markets.

As of December 31, 2015, the total number of retail outlets increased to 2317.

Zhou Dafu believes that the fourth quarter or will continue the three quarter of the downturn.

Huang Shaoji, managing director of Zhou Dafu, said that the decline in performance will continue to the lunar new year. It is expected that there will be double-digit sales in Hong Kong and Macao during the Spring Festival. The fourth quarter of this year's 1-3 quarter performance will also be similar to that in the three quarter.

Retail sales in Hongkong expanded to 3.1% in the 1-11 months of last year, according to Hongkong retail data.

In November, sales of jewellery, clocks and watches and precious gifts decreased by 20.6% over the same period last year.

Huang Shaoji said that the decline in performance will continue into the lunar new year, which is expected to still have double digit decline during the Spring Festival. He also disclosed that the three quarter of Hong Kong and Macao will eventually net 5-6 retail outlets, and the mainland's new stores will also be reduced to 50-60 from the original 150-160.

The 11 day Research Report of cross bank international pointed out that Zhou Dafu's short-term sales / profit outlook is still full of challenges, maintaining a neutral rating with a target price of HK $5.

Zhou Dafu released January 8th earnings report, as of the end of the three quarter, the same store sales fell by 15% year-on-year, retail value fell by 11% year on year.

The company said that sales of the same store in the mainland fell by 6% a year, while the retail market in Hongkong and Macao declined due to the continued downturn and the decrease in the number of mainland visitors to Hong Kong. The same store sales in Hong Kong and Macao fell by 23%, which was 13% in the first quarter.

The mainland's retail value fell by 6%, and Hong Kong and Macao fell by 20%.

Managing director Zhou Dafu

The US dollar is strong, passengers are diverted to other countries, and local consumption is weak. Therefore, Hongkong's retail market continues to be weak, which is larger than that of the mainland.

The retail value of the mainland is affected by the depreciation of the renminbi. If the fixed exchange rate is used, the retail value of the mainland and the companies will drop by 2% and 9% respectively.

The 11 day Research Report of cross bank international pointed out that Zhou Dafu's short-term sales / profit outlook is still full of challenges, maintaining a neutral rating with a target price of HK $5.

Cross bank international pointed out that

In the two quarter, after a small gold rush, the sale of Zhou Dafu gold in the same store increased from 13% in the 2 quarter to 14%, but the consumption / macro atmosphere in the two markets of the mainland and Hong Kong and Macao further deteriorated, which was also a factor contributing to poor performance.

China

The same store sales of inlaid ornaments have fallen (which has always been anti falling), and the decline has been extended from 7% in the 2 quarter to 7%, and the impact is obvious.

Looking forward to the future, as China's passenger consumption growth continues to slow in Hongkong, and the local macro environment in Hongkong and China face greater resistance, and in the absence of a bigger picture of the increase in promotional / discount sales and the decline in rents in Hong Kong, the Bank of Hong Kong International expects that the short-term sales / profit outlook of Zhou Dafu is still full of challenges.

The bank also pointed out that the recently adopted Hongkong competition regulations forced Zhou Shengsheng and 116HK operators to cancel the Commission on gold / platinum products, but Zhou Dafu did not take the same action on 2%.

The bank believes that since the net retail price of the product is the main factor, Zhou Dafu has considerable competitiveness in this regard, taking into account other charges such as craftsman fees, raw material costs, design and brand assets, so the impact of the Ordinance is slight.