On May 29th, Ms. Wang Junxuan, Company Secretary and Chief Financial Officer of CHOW SANG SANG, met with the media following the Annual General Meeting. She indicated that the overall sales atmosphere during the recent May Day holiday was positive. Both the Hong Kong and mainland China markets experienced a degree of consumption-driven activity, with robust customer traffic and sales momentum in key markets and new commercial districts, contributing to stable overall business performance.
Regarding recent fluctuations and corrections in gold prices, Ms. Wang noted that the impact is not direct and depends on the product mix, pricing strategy, and inventory turnover speed. As a fully directly-operated company, the group possesses greater flexibility in pricing and inventory allocation. A decline in gold prices presents both positive and negative effects: positively, it can stimulate demand and reduce restocking costs; negatively, it may lead consumers to adopt a wait-and-see attitude.
Mr. Chow Wing Shing, Chairman and Group General Manager, emphasized that the group is not a financial investment institution and does not speculate on gold price movements. The approach is to cautiously manage inventory in response to market changes. As a retailer, the safest practice is to accelerate inventory turnover to mitigate price volatility risks. The group has a hedging mechanism in place but will not adjust it frequently due to short-term gold price fluctuations, as that would constitute speculative behavior. Concerning price adjustments, changes are made when costs exceed manageable levels, but this is not used as a promotional strategy.
On the topic of rents, Ms. Wang stated that overall rental costs are largely stable, though there may be variations in specific locations or shopping malls. The group maintains good relationships with landlords, and lease renewals are decided based on commercial principles. Chairman Chow Wing Shing added that while rent is an important consideration for store openings, factors such as mall location, development potential, and alignment with brand needs are equally crucial; therefore, rent is just one of several factors.
Furthermore, Ms. Wang pointed out that e-commerce has consistently been a vital segment of the group's business, particularly in the mainland China market, where online sales already account for over 20% of total local retail, forming a core part of the omnichannel strategy. Regarding the physical store strategy, she emphasized that the group operates a fully directly-managed retail model. The focus is on continuously optimizing the distribution network, concentrating expansion efforts in mainland China on first-tier and new first-tier cities, as well as promising commercial districts, while also adjusting the performance of underperforming stores.
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