Author | Wang Xiaojuan
Editor | Zhou Zhiyu
The soaring gold price failed to continue driving consumers to &#34;grab gold&#34;, and the performance of gold shops is no longer as good as before.
Even Chow Tai Fook, known as the &#34;number one Chinese jewelry brand&#34;, was not spared. The financial results for the second quarter of this year (the first quarter of the 2025 fiscal year) recently released by Chow Tai Fook reflect this.
The performance announcement shows that Chow Tai Fook's retail sales in the second quarter decreased by 20% year-on-year. In particular, in the Chinese mainland market, which accounts for over 85% of its business, retail sales dropped by 18.6%; while in Hong Kong, Macau, and other markets in China, the decline was 28.8%.
2023 was a big year for gold consumption. Last year, buying gold jewelry and hoarding small gold beans became one of the most popular ways for young people to manage their finances. Purchasing gold jewelry also became one of the hottest topics on social media. With the soaring gold price, buying gold no longer carried the label of &#34;auntie&#34; but became a smart choice.
On the other hand, weddings that were postponed in the previous years due to the pandemic were all held last year, coinciding with the Chinese lunar Year of the Dragon, resulting in the highest number of marriages in recent years. According to data from the Ministry of Civil Affairs, the number of marriages registered nationwide last year reached 7.682 million pairs, an increase of 12.4% year-on-year.
As gold jewelry is a necessary consumption item for weddings, consumption naturally remained strong.
The &#34;China Gold Jewelry Market Report 2024&#34; released by the China Gold Association shows that in 2023, the retail sales of gold and silver jewelry by designated units reached 331 billion yuan, an increase of 13.3% year-on-year, reaching a historical high. In terms of gold jewelry consumption, in 2023, China's gold jewelry consumption reached 706.48 tons, an increase of 7.97% compared to 2022.
This prosperity was also reflected in the performance of many gold shops.
Chow Tai Fook's financial report for the 2024 fiscal year (ending on March 31, 2024) shows that in that fiscal year, Chow Tai Fook achieved a turnover of 108.713 billion Hong Kong dollars, an increase of 14.82% year-on-year; the attributable profit to shareholders reached 6.499 billion Hong Kong dollars, an increase of 20.71% year-on-year.
Furthermore, in order to catch up with the wave of gold consumption, Chow Tai Fook has rapidly expanded over the past two years. In the 2024 fiscal year, Chow Tai Fook added a net of 143 stores, achieving the goal of opening 7,000 stores originally set for the 2025 fiscal year ahead of schedule.
The industry's prosperity is also reflected in the performance of its peers. Another smaller jewelry store, Chow Sang Sang, also saw a 28% increase in revenue in the same fiscal year.
Unfortunately, this prosperity did not last long.
This year, the gold price rose to historic peak levels. For example, on September 12th, the gold price at Chow Tai Fook was 746 yuan/gram, while other brands were also around 740 yuan/gram. This price made many people hesitate, and during the previous process of chasing the rise, many consumer demands had already been released in advance, leading to a return to calm in gold jewelry consumption.
With the overall market shrinking, Chow Tai Fook, as a leading player, became the first to suffer
In addition to the decline in performance, CHOW TAI FOOK is also closing more stores. In the second quarter, it closed a net total of 91 stores, with a total of 180 stores closed in the first half of this year.
CHOW TAI FOOK's previously successful &#34;sea of stores&#34; strategy is now failing, as opening more stores will only reduce the sales of each store. In the second quarter, same-store sales of CHOW TAI FOOK's directly operated and franchised stores in Mainland China decreased by 26.4% and 19.1% year-on-year, respectively, while same-store sales in Hong Kong and Macau decreased by 30.8% year-on-year.
It seems that despite the record high gold prices, the days of gold shops are not looking good.
In the first half of the year, CHOW TAI FOOK's revenue and net profit also declined at a double-digit rate. The comprehensive revenue was HKD 11.313 billion, a 13% year-on-year decrease; while the net profit attributable to equity holders was HKD 526 million, a 36% year-on-year decrease.
The situation faced by CHOW TAI FOOK is more complex, as in addition to the impact of weak gold jewelry consumption, the company also faced issues such as &#34;influencer accidents&#34; this year, all of which have become factors affecting its performance.
In addition, in June, CHOW TAI FOOK hit the hot search with the term &#34;Shenzhen factory shutdown&#34;, although it was later clarified as a relocation rather than a shutdown, it still resulted in a significant number of layoffs during this process.
The situation faced by companies like CHOW TAI FOOK is mainly the result of changes in consumer trends.
Many brands have indicated in their financial reports this year that they can clearly feel that consumers at all levels are becoming more rational.
In an uncertain environment, facing a non-essential consumer product like gold, consumers naturally become more cautious.
In the early stages of rising gold prices, many people would invest due to the opportunity. Now that prices have risen to the level of luxury goods, the investment value is extremely limited; purely for consumption, the popular saying from last year, &#34;It's not that I can't afford XX, it's that XX offers better value for money,&#34; explains the mindset of consumers today.
Moreover, rational consumers are no longer willing to pay the high design and processing fees charged by gold shops. Some consumers choose to directly purchase gold bars from banks to make jewelry.
The market is always like this, able to generate heat waves, but also quick to extinguish them, ever-changing.
For companies to navigate through cycles, they need to anticipate consumer sentiment in advance and have sufficient adaptability

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In the first quarter of the 2025 fiscal year, CHOW TAI FOOK's performance showed a 20% year-on-year decline in retail sales despite the surge in gold prices. Retail sales in the mainland China market dropped by 18.6%, while Hong Kong, Macau, and other markets fell by 28.8%. 2023 was a peak year for gold consumption, with young people keen on buying gold jewelry, but increased consumption rationality did not sustain CHOW TAI FOOK's performance

- The soaring gold prices failed to sustain the consumer frenzy for buying gold, impacting jewelry stores like Chow Tai Fook, whose Q2 2025 fiscal performance saw a 20% YoY retail sales decline, notably in mainland China and other markets. The previous gold consumption surge in 2023, driven by weddings and investment trends, has now cooled off, affecting jewelry retailers' revenues.
- Despite a prosperous period reflected in past financial reports, Chow Tai Fook faced a challenging year with declining sales, store closures, and changing consumer trends towards more rational spending on luxury items like gold jewelry. The market shift highlights the need for businesses to adapt to evolving consumer sentiments to navigate through economic cycles effectively.

The soaring gold price failed to lift CHOW TAI FOOK