Key Takeaways
Chow Tai Fook Jewellery Group Ltd. (1929.HK) expects its full-year net profit to increase by 45% to 55% for the year ended March 31, 2026, citing the benefit of surging gold prices.
"The increase is mainly attributable to the improvement in gross profit margin driven by higher gold prices, a more favorable sales mix towards retail business and fixed price jewellery, and operating leverage from disciplined cost management," the company said in a stock exchange filing.
The Hong Kong-based jeweler is benefiting from a sharp rise in the value of the precious metal, with spot gold prices climbing approximately 37% over the past year to trade around $4,568 an ounce. The company's positive alert suggests its retail-focused strategy is paying off amid a volatile market.
The forecast signals strong momentum for the luxury goods sector, suggesting consumer demand for high-end jewelry remains resilient. The performance may lead to analyst upgrades and will be closely watched as a bellwether for retail sentiment in Greater China.
Gold's rally has been a significant tailwind for jewelers. The metal is often seen as a haven during economic uncertainty and a hedge against inflation. Persistent central bank buying and geopolitical tensions in the Middle East have provided further support for prices, according to market analysts. This environment allows retailers like Chow Tai Fook to benefit from higher margins on their inventory.
Chow Tai Fook, one of the world's largest jewelry retailers by market value, has been focusing on optimizing its store network and enhancing its product mix. The shift towards more fixed-price items, which typically carry higher margins than traditional weight-based gold products, has been a key part of its strategy to enhance profitability.
The positive profit alert sets a bullish tone ahead of the company's official annual results announcement, expected in June. Investors will be watching for the final dividend declaration and management's outlook on consumer demand for the year ahead.
This article is for informational purposes only and does not constitute investment advice.
