Zhou Dafu Jewelry Group Limited released the main business data in the three quarter of January 10th as of December 31, 2019. During the reporting period, the retail value of Zhou Dafu mainland China increased by 17% compared with the same period last year, while the same store sales increased by 2% compared with the same period, while the same store sales fell 9%. Compared with the same period, the sales volume of jewelry stores in the mainland of China increased by 1% in the same period, while the retail value increased by 14%.
During the reporting period, the same store sales in Hongkong and Macao recorded a year-on-year decline of 35%, while the same store sales in mainland China recorded a year-on-year growth of 2%, which is an improvement over the negative second in the second quarter of this fiscal year. Among them, Hongkong and Macao jewelry store sales fell by 53% year-on-year, while gold products fell by 26% year-on-year. Sales of the same products in mainland China increased by 1% and 1% respectively in two products. Retail sales in Hongkong and Macao fell by 38% year-on-year, while mainland China increased by 17% annually.
In addition, the average selling price of jewellery and jewelry in Hongkong and Macao was 11 thousand and 200 yuan, down 1.75% by year, while 6700 yuan in the mainland, an increase of 4.69% on average.
In terms of gold products, the average selling price in Hongkong and Macao surged 37.84% to 10 thousand and 200 yuan per year and 19.05% to 5000 yuan in the mainland of China. The average international gold price in the quarter was 21% higher than that of the same period last year.
Zhou Dafu explained that the growth of the retail value of jewellery ornaments, on the one hand, was driven by the new retail outlets opened in the past 12 months. During the reporting period, the average selling price of jewellery inlaid jewelry in mainland China was 6700 Hong Kong dollars, the same period was 6400 Hong Kong dollars in the previous fiscal year. On the other hand, the sales of the same products in the third quarter of the Zhou Dafu gold products decreased by 1%, mainly because of the fluctuation of gold prices, which led to a decrease in the sales of gold products. The sales volume of gold jewelry in the same period was 6700. During the reporting period, the average international gold price increased by 21% over the same period last year. The average selling price of gold products in mainland China was HK $5000, compared with HK $4200 in the same period last fiscal year.
During the reporting period, Zhou Dafu opened 296 retail outlets in the mainland of China. As of December 31, 2019, the number of retail outlets of Zhou Dafu reached 3789. Compared to the steady development of offline channels, the growth of Zhou Dafu online channels was obvious. During the reporting period, the retail value of Zhou Dafu's e-commerce business in mainland China grew by 26% over the same period, and sales grew 10% over the same period last year.
Public information shows that Zhou Dafu is the largest jewelry retailer in the world, and is the highest income jewelry company in Greater China. The company was founded in 1929 and has a history of 90 years. In fiscal year 2019, the company's revenue amounted to HK $66 billion 700 million: the mainland accounted for 63.7%, the terminal retail volume was nearly 50 billion yuan, the market share was the first (about 7%), and the income of Hong Kong and Macao accounted for 36.3%.
Zhou Dafu jewelry, as the main brand of Zhou Dafu, has two main store styles, namely, mainstream and experiential shops. It provides four major product categories: classics, fashion, marriage and exclusive. With the professional R & D team and keen market observation ability, Zhou Dafu has been focusing on product innovation, capturing the hot spots of the market, and has been the most valuable jewelry brand for many years.
According to Euromonitor data, the scale of jewelry industry in mainland China reached 11 billion US dollars in 2019, and exceeded the Western European market and the US market in 2009 and 2011 respectively. However, from per capita perspective, China's per capita jewellery consumption rose from $16 to US $73 per capita from 2005 to 2018, and per capita growth rate was much lower than that of the industry scale. Compared with the latest data on jewelry consumption in China and the United States in 2018, the per capita consumption of jewelry in China is less than 1/3 in the United States. This result is caused by China's large population, unbalanced urban and rural development and uneven regional development. It also reflects the huge potential of China's jewelry consumption per capita, and the huge increase in consumption of inland and three or four tier cities.
Founder Securities analyst Ni Hua said that the first tier cities are limited and the market tends to be saturated. In recent years, Zhou Dafu has actively laid out three or four line cities. Zhou Dafu has more retail outlets in the second tier cities, but stores in three and below cities are growing faster. Zhou Dafu's three line cities in the 2019 fiscal year increased by 251 retail outlets, much higher than that in the second tier cities and 185 new cities and 50 new cities in the first tier cities. The company is accelerating the pace of the sinking of the channel. Compared with the same industry, Zhou Dafu has a larger proportion of layouts in the second tier stores. The number of stores in the three line and below cities is 37.4% (three and below retail value is 24.3%). With the upgrading of consumption and the acceleration of channel sinking, it is estimated that the future low line cities will be Zhou Dafu's new profit growth area.
Ni Hua pointed out that the blue ocean market should be established. Zhou Dafu joined the retail market is expanding rapidly, and the proportion of retail sales is increasing rapidly. This is also reflected in the terminal retail sales: in the 2019 fiscal year, the RSV growth rate of Zhou Dafu franchised store was 37.9%, far higher than the 3.2% growth rate of self run stores. Combined with the proportion of Zhou Dafu city's retail outlets and the proportion of self owned businesses, we can infer that the expansion of the outlets is biased towards the three tier cities and the mode is mainly franchising. In the future, the company will launch a sinking channel in the form of franchising, which is expected to bring new growth opportunities for the company.
According to the financial report, in the 2019 fiscal year, Zhou Dafu realized operating income of HK $66 billion 700 million, an increase of 12.6% compared with the same period last year, with net profit of HK $4 billion 580 million, an increase of 11.8% over the same period last year. According to the regional perspective, the growth rate and share of the mainland's business revenue were higher than that of Hong Kong and Macao. The mainland's 2019 fiscal year income increased by 15.3% over the same period, accounting for 63.7%. Online channel revenue increased by 13.2% over the previous year, accounting for 11.7% of the self operated channel, which is higher than the traditional main channel, which only keeps 3.2% growth in offline stores. According to the category, gold is still the most important product category of the company, with revenue above 50% and its growth rate reaching 17.21%. The growth rate of jewellery products increased from last year to 9.62%, and the market potential is still huge.