Chow Tai Fook adds to luxury gloom Disappointing quarterly results sent shares of Chow Tai Fook, the world's largest jewellery retailer by market value, down nearly 9 per cent in Hong Kong on Thursday, deepening a sector-wide slump as China's slowing economy saps luxury demand. The Hong Kong-based jewellery chain said late on Wednesday that same-store sales in Hong Kong and Macau, where it generates about half its revenue, fell 1 per cent year on year in the April-June quarter. In mainland China, where it aims to open 2,000 outlets by 2014, same-store sales growth was 10 per cent. It gave no comparison with the same quarter a year ago since the company only went public in December, but the figures marked a dramatic slowdown from annual same-store sales growth of over 40 per cent the last fiscal year. Exacerbating the pressure on its shares, Chow Tai Fook said the proportion of higher-margin gem-set jewellery fell to 22 per cent of sales, from 27 per cent for the 12 months ended in March, which analysts said would put pressure on its profit margin. Kent Wong, managing director, said demand for jewellery costing HK$500,000 to HK$1m (US$64,000 to US$129,000) was affected by the poor economy but the company would beef up its marketing efforts to improve the segment's performance. Chow Tai Fook's results added to the gloom in the consumer industry, coming a day after UK luxury fashion brand Burberry reported quarterly results revealing same-store sales growth in China halved in the three months to June 30. Prada's Hong Kong-listed shares fell 4.6 per cent on Thursday. Analysts said Chinese consumers were less willing to spend as the economy slowed at home, with full-year growth in China's gross domestic product expected to come in at 7.5 per cent compared with 9.1 per cent last year. Nevertheless, Chinese tourists were likely to be spending more in Europe because of a weakening euro, said Shaun Rein of China Market Research in Shanghai. The ultra-luxury segment is going to be more resilient, partly because the truly wealthy in China still have a lot of money to spend. These people are also more likely to travel to Europe to buy their luxury handbags after the euro fell around 18 per cent against the renminbi in a year," he said. In addition, he said brands such as Hermes and Chanel were considered more exclusive in China and likely to weather the downturn better than brands such as Burberry, Prada and Louis Vuitton, which appealed more to the "aspiring wealthy." Hong Kong-based iMagineX, distributor of about a dozen western fashion brands in mainland China including Paul Smith, said the number of luxury outlets in China's largest cities might be reaching saturation level. "At the same time, I think there's still plenty of room to grow in China's smaller cities where same-store growth remains above 10 per cent," said Thomson Cheng, iMagineX's managing director.