Chow Tai Fook misses estimates as gold tax change effects loom

Chow Tai Fook Jewellery Group Ltd. reported slightly weaker-than-expected profits amid broader economic headwinds, as concerns grew about its longer-term outlook following China’s removal of a long-standing tax rebate on gold.

First-half net income for China’s largest jewellery retailer remained flat at HK$2.5 billion ($321 million), according to a Tuesday filing, falling short of the HK$2.6 billion analyst estimate. Gross margin fell slightly to 30.5%, although the group said that an improved mix of higher-margin fixed-price jewellery and gold price appreciation provided support.

Average selling prices on fixed-price gold jewellery in mainland China saw growth during the period, amid premiumisation efforts to compete with peers such as Laopu Gold Co.

Chow Tai Fook has faced mounting challenges in recent years, including volatile gold prices, slowing consumer demand, and intensifying competition from home-grown luxury jewellery brands. Still, the company said it remains confident in sustaining its recovery through the second half of fiscal year 2026, despite experiencing short-term industry headwinds.

Its outlook remains uncertain after China scrapped a long-standing gold tax incentive on Nov. 1, a move intended to boost government revenue amid a sluggish property market. The policy could raise the cost of gold purchases for consumers and pressure retailer margins.

Chow Tai Fook previously adjusted some product prices in response to rising gold prices. Shares have climbed 127% year to date.