Gold price declines unleash demand, Chow Tai Fook's growth shifts back towards priced gold.

In the second quarter, gold prices fell from their highs, creating a rare consumer window for Chow Tai Fook.

On July 23, Chow Tai Fook Jewellery Group released unaudited operational data for the three months ending June 30, 2026, which is the first quarter of the 2027 fiscal year.

During the reporting period, the group's retail sales value increased by 15.1% year-on-year. Mainland China saw a growth of 10.7%, accounting for 83.6% of the group’s retail sales value; Hong Kong, Macau, and other markets grew by 44.8%.

Same-store sales of mainland directly operated stores and franchise stores grew by 19.6% and 15.7% respectively, and same-store sales in Hong Kong and Macau markets grew by 41.7%.

The most direct change this quarter came from gold prices.

At the beginning of 2026, international gold prices rose to historical highs in January but then entered an adjustment phase. A sharp decline in June resulted in gold prices denominated in USD and RMB falling by 8% and 10% respectively in the first half of the year.

After a rapid increase earlier, a staged correction in gold prices lowered the threshold for consumers and the supply chain to restock.

World Gold Council data shows that in June, gold withdrawals from the Shanghai Gold Exchange increased by 36% month-on-month to 87 tons, mainly driven by opportunistic restocking in the supply chain and personal investors buying on dips after the price drop.

However, as gold prices remain significantly higher than the same period last year, overall gold jewelry consumption is still weak.

In this quarter, same-store sales volume at Chow Tai Fook’s directly operated stores in mainland China fell by 5.2% year-on-year. The focus-priced jewelry segment performed worse than weighed gold, and the process of brand transformation and restructuring of product portfolio was constrained.

During the period, same-store sales of priced jewelry in mainland China dropped by 1%, and its retail sales value decreased by 8.2%, with its proportion of total retail sales value falling from 34% to 29%.

Some new products are still providing incremental growth.

Chow Tai Fook launched the "Wan Xiang" series in April, with retail sales in the first quarter exceeding HK$870 million, surpassing management expectations; in June, it launched the "Oriental Chinese Couture" high jewelry series.

The group also added 4 high-end image stores in premium shopping malls such as Changsha International Finance Center and Nanjing Deji Plaza, bringing the number of high-end image stores in mainland China to 12.

Chow Tai Fook is still downsizing its traditional store network.

In this quarter, Chow Tai Fook opened 14 new jewellery retail locations in mainland China and closed 272, resulting in a net decrease of 258. As of the end of June, Chow Tai Fook jewellery retail locations in mainland China fell to 5,047, of which 69.4% are franchise stores.

The fall in gold prices temporarily eased Chow Tai Fook’s sales pressure but also shifted growth back toward weighed gold. Whether this sales rebound can further translate into improved margins still awaits confirmation from subsequent financial reports.

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