In the third year of its brand transformation, the Hong Kong heritage jewelry brand Chow Tai Fook (01929.HK) announced a return to positive year-on-year net profit growth. On May 6, Chow Tai Fook Jewellery Group Limited stated that the group's net profit for the year ending March 31, 2026, is expected to increase by approximately 45% to 55% compared to the previous fiscal year.
In April 2024, Chow Tai Fook initiated a five-year brand transformation plan, making adjustments to its brand, product structure, and digital strategy. In the first year of transformation, fiscal year 2025 (April 1, 2024 - March 31, 2025), Chow Tai Fook's turnover decreased by 17.5% year-on-year to HKD 89.656 billion, while profit attributable to shareholders fell by 8.97% to HKD 5.916 billion.
The performance fluctuations did not deter Chow Tai Fook's transformation resolve. Since last year, the company has continuously optimized its store network and adjusted its product mix, setting its sights on the high-end market. Recently, Chow Tai Fook announced a foray into the home sector with the launch of "Chow Tai Fook Living," collaborating with the century-old French porcelain brand Bernardaud to create two tableware series, "Chuan Fu" and "Yinxing." According to the group's Chief Operating Officer, Huang Yanqiong, the Chow Tai Fook Living product line was developed over more than 18 months. Beyond the tableware series just launched, it will gradually expand to decorative ornaments, accessories, and other categories, with plans to enter overseas markets.
The company aims to integrate gold more deeply into customers' daily lives beyond ceremonial occasions like weddings. Chow Tai Fook Living products adopt a fixed-price model, with items ranging from thousands to hundreds of thousands of yuan. This move from selling gold to attempting to sell a lifestyle indicates that this nearly century-old brand is not content with merely being a traditional gold jewelry retailer.
By entering the home sector, Chow Tai Fook seeks to enrich its brand heritage in consumers' minds and further solidify its position in the international luxury market, as stated by Cheng Chi-man, Vice Chairman of Chow Tai Fook Jewellery Group and a third-generation member of the Cheng family.
It's not just Chow Tai Fook; popular mainland Chinese ancient-style gold brands are also looking towards the luxury market. The founder of a fashion industry analysis platform pointed out that traditional gold retail operates on very low gross margins. Even industry leaders like Lao Feng Xiang (600612.SH) have low gross margins because their business model essentially earns only processing fees. Only by selling the premium associated with brand and design, like luxury goods, can higher profits be achieved.
The analyst believes that in the Chinese market, the declining trend of traditional top-tier European and American jewelry brands has created space for the rise of local Chinese gold brands. However, China currently lacks a deep-rooted gold-wearing culture or profound reverence akin to India's, and cultivating daily wear habits still requires a process.
Opening Large-Format Stores: Chow Tai Fook Sells a HKD 780,000 Gold Earbud Case Traditionally, Chow Tai Fook has been perceived by consumers as a conventional gold shop. As part of one of Hong Kong's four major families, the Cheng family has steered Chow Tai Fook for nearly a century. Founded in Guangzhou in 1929, the brand shifted its focus to Hong Kong and Macau around the 1940s. At a time when Hong Kong's gold standards were inconsistent, Cheng Yu-tung, the then-leader and first-generation patriarch of the Cheng family, pioneered the "four nines fine gold" standard (99.99% purity) in 1972, quickly establishing brand recognition.
In the 1990s, Chow Tai Fook innovatively introduced a fixed-price policy for jewelry. Its first mainland China store opened in Beijing in 1998, marking the beginning of its expansion there. Over the past decade, Chow Tai Fook rapidly penetrated the mainland market through a franchise model, with retail points exceeding 7,000 by 2024, driving group revenue past HKD 100 billion.
However, with high gold prices leading to decreased sales of weight-based gold products, many quickly established franchise stores, especially in lower-tier markets, failed to deliver expected returns. This not only dragged down the group's gross margin but also blurred its brand image.
In 2022, third-generation family member Cheng Chi-man assumed the role of Vice Chairman and Executive Director of Chow Tai Fook Jewellery Group. In April 2024, the five-year transformation plan was launched. The contraction of its retail network has drawn significant attention. Over the last two fiscal years, Chow Tai Fook has net-closed over 1,860 retail points in mainland China. In fiscal 2025, it net-closed 896 retail points in the mainland market, followed by 969 in fiscal 2026. As of the end of March 2026, the number of mainland retail points stood at 5,305, with 70.9% being franchise stores.
While closing underperforming stores, Chow Tai Fook has focused more on opening new locations in high-end shopping malls. In fiscal 2025, it launched newly designed stores in Hong Kong, Shenzhen, Wuhan, Xi'an, and Shanghai to enhance its premium brand attributes. In February of this year, Chow Tai Fook opened a flagship store exceeding 1,000 square meters on Canton Road in Tsim Sha Tsui, Hong Kong.
Reflected in the data, for the first half of fiscal 2026 (the six months ended September 30, 2025), Chow Tai Fook's same-store sales returned to positive year-on-year growth, increasing by 2.6% in mainland China and 4.4% in Hong Kong and Macau. For the fourth quarter of 2025 and the first quarter of 2026, same-store sales in mainland China grew by 21.4% and 0.2% year-on-year, respectively, while Hong Kong and Macau recorded growth of 14.3% and 40.1%.
On the product front, Chow Tai Fook has increased its focus on higher-margin, fixed-price products. Since 2024, it has launched the Chuan Fu and Chuan Xi series and collaborated with the Palace Museum and the streetwear brand CLOT. In June 2025, it introduced its first high jewelry collection, "Harmonious East." In fiscal 2025, the turnover from fixed-price gold products surged by 105.5% year-on-year. In the fourth quarter of fiscal 2026 (January to March 2026), fixed-price jewelry contributed 36.2% to the retail sales value in the mainland market.
In March of this year, Chow Tai Fook released the CTF Accessories New Chinese Style accessory series. One item, a gold earbud case priced at HKD 788,800, sold out quickly after a limited release. A gold-inlaid hair clip was priced at HKD 2,080. Pricing significantly above the intrinsic product value sparked discussion, revealing the brand's attempt to build a sense of "luxury." Also in March, the company announced the appointment of David Tse, former Creative Director for China at Hermès, as its Global Creative Director, seen as a step towards aligning with international luxury standards.
The Distance to True Luxury: Still Influenced by Gold Price Fluctuations In recent years, high gold prices and the popularity of the ancient-style gold segment have attracted more consumers to purchase fixed-price gold jewelry. However, when gold prices fall, whether brands can continue to attract consumers and whether their products' perceived value preservation can withstand cyclical fluctuations will determine if they can truly become luxury brands.
It was noted that in 2025, Chow Tai Fook adjusted prices for its gold products in March, October, and December, with many being fixed-price items. A planned price adjustment in early March of this year was reportedly postponed due to volatility in international gold prices.
The industry analyst pointed out that domestic gold jewelry consumption in China is still influenced by gold prices and has not completely shed its investment attributes. When gold prices fall, consumers reduce purchases due to depreciation concerns, leading to sales declines. This differs fundamentally from traditional luxury goods driven primarily by brand power.
Laopu Gold (06181.HK), one of the fastest-growing brands in recent years, is no exception. A UBS research report released in late April predicted that Laopu Gold's same-store sales growth would slow starting in the second quarter of this year. Based on UBS's observations and channel checks, same-store sales at high-base stores in Beijing declined by 20% to 30% in March and through April, attributed to weak gold prices and incomplete digestion of inventory purchased by resellers before price hikes in January-February.
However, UBS also noted that the sales decline was more pronounced among resellers than regular consumers, with demand from VIC (Very Important Customer) consumers showing more resilience compared to middle-class and entry-level consumer groups.
A research report from CMB International in April indicated that, based on its research, reseller sales accounted for about 40% of total revenue at Laopu Gold's SKP mall store, significantly higher than at its other mall locations. As resellers are far more sensitive to gold price changes than regular consumers and likely stocked up heavily before Laopu Gold's price increase in late February, the gold price drop or sharp volatility in March-April caused a temporary halt in reseller purchases. Nevertheless, the institution believes Laopu Gold's actual revenue performance is likely much better than market research data suggests.
Some viewpoints suggest that the "luxurification" of local gold brands is not necessarily an active strategic shift but rather a "forced upgrade" under the dual pressures of volatile raw material prices and consumer upgrading.
Despite being unable to fully escape the influence of gold prices for now, as Chinese consumers gradually become disenchanted with international luxury brands, local brands are presented with an opportunity.
Financial reports show that in 2025, Laopu Gold achieved revenue of RMB 27.303 billion, a year-on-year increase of 221%, with annual profit of RMB 4.868 billion, up 230.5%. For the first quarter of 2026, Laopu Gold expects revenue of approximately RMB 16.5 to 17.5 billion and net profit of about RMB 3.6 to 3.8 billion.
In terms of revenue scale, Chow Tai Fook Group already leads the global jewelry retail industry. It also ranked among the top ten in Deloitte's "2023 Global Powers of Luxury Goods" report.
However, regarding high profit margins and strong brand溢价, Chow Tai Fook, Laopu Gold, and similar brands still have ground to cover compared to international luxury houses. For the first half of fiscal 2026, Chow Tai Fook Group's gross margin reached 30.5%, with an operating profit margin of 17.5%. While leading among gold brands, this remains some distance from the nearly 70% gross margin of Richemont, the parent company of Cartier and Van Cleef & Arpels.
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