The complexity of gold runs through the whole industry.
People’s demand for gold may come from anxiety when they don’t get this rare substance. The birth of anxiety is closely related to factors such as currency devaluation, low yield of other investment products or risk avoidance.
The price of gold is the price of this anxiety.
As the downstream of the industrial chain, gold jewelers also fluctuate with this change. Rational demand for value preservation, emotion and skill meet here.
At present, the gold and jewelry industry is facing a turbulent time.
The price of gold was in the doldrums, and the sales were at the bottom due to the epidemic.
According to the data of the National Bureau of statistics, in April, the retail sales of gold, silver and jewelry above the quota reached 15.8 billion yuan, a year-on-year decrease of 26.7%. The degree of decline is second only to the automobile industry.
That month, the total retail sales of social consumer goods was 2.95 trillion yuan, down 11.1% year-on-year.
In this situation, jewelry giants keep paceP align = “center” gradually weakening gold price. Metals focus / drawing
“Bad gold price”
Since the collapse of the Bretton Woods system, the price of gold is no longer directly linked to the US dollar. Unlike bulk commodity prices, it is mainly affected by supply and demand. In addition to commodity attributes, its trend is also affected by monetary policy, inflation level, hedging demand and other factors.
This kind of entanglement is moving towards an inflection point in the near future.
According to the official website of China National Gold Group Gold Jewellery Co.Ltd(600916) Association, citing the precious metals weekly report released by metals focus on May 16, in early March this year, the price of gold once rose to near the historical peak, but then fell sharply, down $200 / ounce from the peak so far this year, or more than 10%.
During the past two weeks, whether before or after the Federal Reserve’s interest rate decision on May 4, investors have accelerated the selling of gold. During this period, the traditional negative correlation between gold price and US dollar reappeared, and the nominal and real yields of bonds also increased significantly.
Based on various macro factors, the aforementioned weekly report predicts that the gold price will gradually weaken before the end of the year.
On May 20, the benchmark price of Shanghai gold was quoted at 397.45 yuan / g in midday trading, compared with 394.87 yuan / g the previous day.
Jewelers have different attitudes about the impact of gold price on sales.
China National Gold Group Gold Jewellery Co.Ltd(600916) said in the annual report that gold was selling well under the condition of hedging demand and process upgrading. The company’s revenue last year was 50.758 billion yuan, a year-on-year increase of 50.23%; The net profit was 794 million yuan, a year-on-year increase of 58.84%.
In the investor exchange minutes in May, Chow Tai Seng Jewellery Company Limited(002867) also believed that the consumption of gold products would maintain a certain boom, mainly due to the over issuance of global currencies and the characteristics of gold against inflation.
Last year, Chow Tai Seng Jewellery Company Limited(002867) revenue was 9.155 billion yuan, an increase of 80.07% year-on-year; The net profit was 1.225 billion yuan, a year-on-year increase of 20.87%. Gold is its main raw material, accounting for 80.01% of the total purchase, with a purchase amount of more than 5.9 billion yuan.
However, when the price of gold is in the doldrums, the attitudes of various countries have changed.
“Gold consumers are divided into two categories: chasing up and killing down. When gold prices rise or fall, they have different consumption and investment preferences.” At the investor relations event on May 12, China National Gold Group Gold Jewellery Co.Ltd(600916) said.
Another head jewelry company executive admitted to the 21st Century Business Herald reporter that he did not understand the relationship between gold price and sales. “At the bottom of the gold price last year, the sales volume was also good. Consumers are not stupid and will fall. They have been engaged in business for more than 20 years and don’t think there is an inevitable connection between the two.”
There are also head jewelry people said that with the lightweight of jewelry, it is farther and farther away from the price of gold.
“The sales situation is affected by a variety of comprehensive factors such as market environment and consumer demand, rather than a single factor.” Beijing Caishikou Department Store Co.Ltd(605599) so responded.
On the other hand, as the epidemic situation repeats and the industry goes to a trough, the giants are not spared.
China National Gold Group Gold Jewellery Co.Ltd(600916) in the investor exchange minutes in April, it was disclosed that the epidemic situation in March and April closed about Shenzhen Jt Automation Equipment Co.Ltd(300400) stores in the area where the epidemic occurred, mainly in Shanghai and its surrounding areas, Liaoning and other places.
“The April ordering meeting was still affected by the epidemic, but the consumption momentum on May Day has improved.” Chow Tai Seng Jewellery Company Limited(002867) external name.
“Continuous expansion”
Faced with this situation, the jewelry giants seem quite calm.
Chow Tai Seng Jewellery Company Limited(002867) at the investor relations event, he said that in May, the marketing rhythm was tight and the intensity was unprecedented, and a new IP “national treasure” series would be released.
“The target is at least flat in the second quarter. Through the efforts in the second half of the year, it is expected to achieve the annual growth target of 10% – 20%.” Name of management.
The driving force comes from channel expansion.
Chow Tai Seng Jewellery Company Limited(002867) this year, the provincial representative model was optimized. It said that it would make a specific analysis of each province and region, and further clarify the division of labor and functions in combination with the resources and advantages of local provincial representatives, so as to form a full package model, four package model, three package model, two package model and one package model. The goal of opening stores in 2022 is 400500.
In addition, according to the 21st Century Business Herald, the reporter learned from the company that the aforementioned goal of opening a store is only a relatively conservative caliber.
In terms of products, Chow Tai Seng Jewellery Company Limited(002867) also comes from gold.
Based on the investment model of gold stores and product lines of gold stores last year, the product portfolio and product lines of gold stores will be adjusted according to the specific consumption scenarios and product lines of gold stores.
In the first quarter, Chow Tai Seng Jewellery Company Limited(002867) revenue was 2.754 billion yuan, a year-on-year increase of 138.15%; The net profit was 289.9 million yuan, a year-on-year increase of 23.26%.
It is worth noting that Chow Tai Seng Jewellery Company Limited(002867) most of the sales come from franchised stores.
The annual report shows that last year, its franchise business revenue was 6.522 billion yuan, a year-on-year increase of 103.66%, accounting for 71.24% of the total revenue. In terms of the number of stores, there are 4264 franchise stores and only 238 self operated stores. According to this proportion, most of the 400500 incremental stores should be franchise stores.
This allows Chow Tai Seng Jewellery Company Limited(002867) to reduce the risk, but it also means that the decision is not in its hands. The intention of franchisees is the key.
Chow Tai Seng Jewellery Company Limited(002867) seems quite confident about this.
“The enthusiasm of franchisees to open stores is composed of two factors: the current rate of return and the expectation for the future. Although the epidemic has been repeated in the past two years, due to the rise of gold price, the appreciation of inventory and the prosperity of jewelry consumption, the overall return on investment of franchisees is relatively stable, and the overall expectation of franchisees is relatively optimistic.” In March, Chow Tai Seng Jewellery Company Limited(002867) management said.
But as the environment changes, this optimism may change.
At the investor exchange activity in April, China National Gold Group Gold Jewellery Co.Ltd(600916) said that the short-term goal was to open 4000 stores. However, in May, its caliber was changed to “there is no specific quantity guideline for opening stores this year”.
At the same time, China National Gold Group Gold Jewellery Co.Ltd(600916) also explained that the expansion of stores in other regions of the country continued to advance, except that the expansion speed of stores in some regions affected by the epidemic slowed down.
China National Gold Group Gold Jewellery Co.Ltd(600916) also revealed that some franchisees are in trouble.
“At present, there are no franchisees who are willing to quit. Some are in the wait-and-see stage. The company arranges relevant personnel to connect and help franchisees get out of trouble.” Its name.
According to the annual report, last year, Chow Tai Seng Jewellery Company Limited(002867) closed 421 stores, accounting for 9.35% of the total number of stores, including 33 self operated stores and 217 franchised stores, with a franchise store withdrawal rate of 5.09%. In the same year, the number of franchise stores increased by 324.
Beijing Caishikou Department Store Co.Ltd(605599) choose direct expansion. In the 21st century, reporters will continue to expand their coverage outside Beijing. For example, four stores were opened in Xi’an in the first quarter.
Beijing Caishikou Department Store Co.Ltd(605599) also added, “the development plan and mode will be adjusted in time according to the market situation.”
According to the financial report, last year, the company’s revenue was 10.406 billion yuan, a year-on-year increase of 47.23%; The net profit was 364 million yuan, a year-on-year increase of 0.61%.
In fact, in the interview, from executives to middle-level, they are full of confidence in the future of the industry.
This may come from the understanding of the cycle. According to the data of the National Bureau of statistics, in 2021, the total retail sales of gold, silver and jewelry commodities of units above the designated size was 304.1 billion yuan, breaking the 300 billion yuan mark for the first time, more than 40 billion yuan more than 2019 before the epidemic, with a year-on-year increase of 29.8%, ranking first in all commodity categories.
I hope this confidence will continue.
