Despite a drop in earnings, shares of Lao Feng Xiang, one of China’s most storied jewelry brands, showed growth on the Shanghai Stock Exchange, as investors responded to the company’s resilience in the face of rising gold prices and evolving consumer habits.
Lao Feng Xiang [SHA: 600612] closed at CNY52.40 (USD7.23) per share today, marking a 2.6 percent increase. However, the stock has experienced a sharp decline of 41 percent from its peak of CNY89.49 in April of the previous year.
In its latest earnings report, the Shanghai-based jewelry retailer revealed a 12 percent dip in net profit, which fell to CNY2 billion (USD269 million) for the 12-month period ending December 31. Additionally, revenue slid 21 percent, dropping to CNY56.8 billion (USD7.8 billion).
The company attributed the financial downturn to several external factors, including sluggish global economic growth, decreasing demand within China, and the continuing surge in gold prices.
These factors collectively suppressed consumer interest in gold jewelry, with Chinese consumption of gold jewelry falling by 25 percent to 532 tons in 2024, as reported by the China Gold Association. The price of gold also increased by nearly 28 percent during the same period.
Lao Feng Xiang’s expansion efforts were also impacted, with the company failing to meet its expectations for new store openings.
By the end of the year, it had almost 5,840 outlets globally, including nearly 200 directly-operated stores, reflecting a modest 10-store increase from the start of the year. However, the company closed 170 franchise stores, adding to the challenges.
In line with the industry trend, other jewelry retailers in China have also struggled with shrinking earnings. Hong Kong-based Chow Tai Fook Jewellery, for example, reported a 27 percent drop in same-store sales for the last quarter of 2024 compared to the previous year, with even steeper declines of 32 percent in Hong Kong and Macau.
Industry experts suggest that traditional jewelry brands are facing increasing pressure from e-commerce platforms and emerging, price-competitive labels.
These new entrants attract consumers with more affordable pricing and innovative marketing strategies, prompting established players like Lao Feng Xiang to make significant adjustments in response to shareholder expectations and evolving market dynamics.
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