Cheng Yu-tung, Honorary Chairman of Chow Tai Fook Jewellery Co. (Image credit: AFP/Getty Images via @daylife)
The world’s largest jewelry retailer has seen it shares rise nearly 17% over the past week, after the company revealed a “remarkable” jump in sales that may be an early sign of a recovery.
Hong Kong-listed Chow Tai Fook said revenue surged 63% during the first quarter as the falling price of gold sent many Chinese consumers rushing into its jewelry shops to stock up on the precious metal. Over half of the retailer’s sales come from gold products sold in its 1,836 stores in Hong Kong, China and Macau.
Nevertheless, Chow Tai Fook’s stock is still down 24% so far this year, amid falling margins for jewelry shops after the sharp plunge in gold prices beginning in April combined with tighter spending by Chinese consumers on luxury goods.
Chow Tai Fook is controlled by Hong Kong’s fourth richest man, Cheng Yu-tung. The jewelry business is part of the larger conglomerate New World Development with interests in property, finance, infrastructure, hotels, department stores and telecommunications.
Cheng got his start in the jewelry industry in the 1940s when he landed a job at a gold shop in Macau named Chow Tai Fook. He married the store proprietor’s daughter and helped to expand the retailer to Hong Kong and beyond. In the 1970s, Cheng expanded the business into real estate. After opening the first China-based store in Beijing in 1998, the jewelry chain rode the tide of the nation’s booming economy ever since.
Cheng raised $2 billion by listing Chow Tai Fook in Hong Kong in late 2011, advancing his net worth significantly. Cheng’s wealth was valued at $16 billion on the World’s Billionaires List in March. He retired as chairman of New World last year.
Chinese consumers have traditionally viewed gold as a symbol of prestige within their culture. Gold jewelry was often worn by royal families in the past and is still seen as an auspicious gift for special events like births and weddings. In recent years, gold coins and bullion has also been used by investors as a hedge against soaring inflation.
http://www.forbes.com/sites/yifanzhu/2013/07/16/billionaires-jewelry-retailer-sees-revenue-surge-on-chinas-gold-fever/
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