Zhou Dafu Half A Year Shop 115 Stop The Rhythm?

Zhou Dafu, a jeweller in Hongkong, is suffering from performance problems and has adjusted its huge retail empire.

Zhou Dafu jewelry published in the report showed that as of the end of September 2015, its net profit fell by 40%, closing 115 retail outlets, accounting for 5% of the total retail outlets, opening 29 retail outlets and increasing retail outlets to 2286 retail outlets.

Regarding the planning of retail stores, Zheng Jiachun, chairman of the Zhou Dafu group, said at the mid term business conference that the expansion of the retail outlets in the next 12 months will be more conservative than before, including the integration of inferior stores and slowing down the expansion of retail outlets. The company expects to improve its profitability. In the first half of this year, there are 3 outlets in Hongkong. The Group expects that there will be 7 to 8 branches in the second half of this year to be adjusted or other branches to undertake business.

He stressed that some of them were not in line with the level of operation or too many shops in some areas, and some shops should be closed to focus on the development of existing stores.

Emphasis on temporarily unintentional layoffs in commercial society, competition everywhere, and Zhou Dafu jewelry in recent years has been quite competitive in the competition, a large number of retail outlets closed, let the outside world worry that Zhou Dafu in distress may try to cut blood through layoffs.

In this regard, President Zhou Dafu said that the integration of Hongkong's retail network is mainly to close some shops which are not in line with the level of operation, or to some areas where there are too many shops. However, it is emphasized that the group has no intention of layoffs for the time being. It will deal with the number of employees through natural wastage, hoping to sort out the quality of employees and focus on resources to enhance the sales and profitability of the shops.

In the first half of the fiscal year, Zhou Dafu, whose net profit fell by 42.2% last year, plans to continue to integrate some low efficiency retail outlets, mainly located in East China and Southern China.

Zhou Dafu, who is in the predicament of speculation, may try to cut blood through layoffs. For this reason, President Zhou Dafu stressed that "the group has no intention of layoffs for the time being, and will deal with the number of employees through natural wastage".

However, jewellery companies have different views and strategies on the growth of this industry. There are 3000 retail outlets and Zhou Shengsheng, who have 330 retail outlets in the mainland, but are planning to expand their chain stores.

A senior official said.

The adjustment or continuation of the "closing number of stores" is higher than the previous average because of the restructuring of more and more department stores in mainland China to adapt to the changing consumption preferences of the retail sector.

Zhou Dafu said.

And Shi Hongyue thinks, "the influence of network sale diverts partial consumer, also can let a few enterprises feel the person that enter store drops."

"The decrease in turnover and retail sales is mainly due to the continued weakness in the consumption intention of the retail market and the decrease in the number of mainland tourists to Hongkong and Macao."

Zhou Dafu said.

Zhou Dafu's share price has fallen nearly 45% since this year due to its poor performance.

It exceeds HK $48 billion, and its market value is HK $59 billion.

In the face of Hongkong's growing popularity with mainland tourists, especially the Hakkas, Zhou Dafu Jewelry Group launched its first Outlet outlets in Mong Kok, Hongkong, in October. The main products are jewelry, some of which are priced at only 5~6 of the original price, and the move is expected to attract local customers.

In addition, Zhou Dafu plans to acquire new business opportunities and jewellery retail opportunities by increasing investment in cross-border electricity providers and cross border channels such as physical stores.

It has signed an agreement with New World Development Co and Zhou Dafu Enterprises Limited Affiliated Companies in August 25, 2015 to develop and operate shopping centers in Qianhai, Shenzhen. The shopping center is expected to open in December 2015 with cross-border e-commerce and physical stores.

Zheng Jiachun said, "since the group business is mainly based on mainland tourists, mainland tourists have reduced their travel to Hong Kong in recent years and pferred to South Korea. Therefore, the group will follow the direction of the passengers and decide on the strategy of opening the store."

In addition, Zheng Jiachun believes that the government's efforts to combat shadow group friends and the zero fare problem will have a positive impact on improving the situation of forced customers shopping.

Zheng Bingxi, financial director, said that although the group was optimistic about the market prospects, some negative factors such as the increase in rent were believed to be unable to be eliminated in the short term. The rent of Hong Kong and Macao is expected to increase by 10% in the near future. Although some new renewals are rented below, the effect of the rent reduction will be the fastest until next year, and the market will not recover immediately, and the group's fixed expenses will still be under pressure, so it is expected that the profit of the group will only slightly improve in the second half of the year.

As for the number of shops, Zheng Bingxi expects to close 7 to 8 stores in the second half of the year, depending on the decrease in rent and market conditions.

Leading company layout strategy differentiation is understood, compared to the Zhou Dafu chain store contraction plan, although the industry slowdown in 2015, affecting the growth rate of some leading enterprises, but Lao Fengxiang, Zhou Shengsheng and other enterprises continue to lay down the chain stores below the line.

A spokesman for Lao Fengxiang said that it did not slow down the pace of opening stores this year. It was growing at the rate of 150 physical stores a year. The number of shops has increased from more than 2800 at the end of last year to more than 3000 now.

This year, 2 entity stores have been opened in Hongkong, and their performance is good. In December, third entities will continue to open in Hongkong.

As for the different performance performance and store layout strategy of the two leading jewellery enterprises, one jewelry insider told reporters that "now Zhou Dafu and Lao Fengxiang have more than 2000 and more than 3000 stores respectively in the low line cities, when the Zhou Dafu of the Hongkong gene can meet with many other international consumer products, Lao Fengxiang has ploughed into the mainland market for many years after all, and will be more deep in the understanding of consumers, product design preference, marketing and so on."

Another Hongkong jewellery company, Zhou Shengsheng, closed 10 stores in the mainland market in the first half of this year, mainly because of its unsatisfactory business performance and the opening of 21 stores during the same period.

Its semi annual report in 2015 showed that turnover fell 1% to 9 billion 245 million yuan in the first half of the year, and jewelry retail contributed 88% of the total turnover, operating profit of 561 million yuan, representing a decrease of 12% compared with the same period last year.

Among them, jewelry sales in Hongkong and Macao fell by 10%, sales in the same store fell by 12%, and store rents increased by 18%.

The total turnover in mainland China increased by 11% to 3 billion 944 million yuan, the same store sales increased by 5%, and online sales grew by more than 70%.

The growth gap between Hong Kong and Macau and Mainland China has made Zhou Shengsheng firmly determined to continue to lay the mainland market.

At present, Zhou Shengsheng has more than 330 branches in more than 90 cities in the mainland.

Zhou Yongcheng, chairman and general manager of Zhou Shengsheng, said that the company will maintain its annual plans to open 50 branches in the mainland. First of all, it should consider strengthening the business of existing cities, and then developing new cities.