Net profit doubled, Chow Sang Sang faces new challenge: The long-distance race of "decoupling" from gold prices has just begun

What are the core challenges of AI · Chow Sang Sang’s transformation towards value-driven growth?

This report (chinatimes.net.cn) by Zhou Mengting, Beijing

After experiencing a performance downturn in 2024, Chow Sang Sang saw a strong rebound in 2025. On March 16, the company released a earnings forecast indicating that in 2025, net profit from ongoing operations is expected to be between HKD 1.6 billion and HKD 1.7 billion, representing a year-over-year increase of approximately 107% to 120%.

However, this significant profit growth largely depends on the rising gold prices, which raises questions about the sustainability of its performance growth. Currently, Chow Sang Sang is on a transformation path, focusing on product design and store experience to deepen brand value. Yet, for traditional gold jewelry companies whose product prices are long tied to gold price trends, shifting from “price-driven” to “value-driven” success remains a challenging journey.

Behind the Double Profit

There are two main sales models for gold jewelry products: the “daily gold price x grams + processing fee” pricing model and the fixed-price model (set price per piece). The recent surge in net profit is largely attributable to the contribution of priced products. Chow Sang Sang stated in its announcement that the performance growth was mainly due to improved sales performance in key markets including Mainland China and Hong Kong, Macau, and Taiwan, especially in the second half of 2025, benefiting from favorable gold price trends and a higher proportion of priced gold jewelry sales, which increased gross profit margins.

Over the past year, spot gold prices hit new highs repeatedly, fueling consumer enthusiasm for gold purchases. Priced products, with their cost-performance advantage at high gold prices, have become a key choice for many consumers. Since Chow Sang Sang’s 2025 financial report has not yet been released, we can glean some insights from its mid-year report.

In the first half of 2025, 66% of Chow Sang Sang’s revenue came from Mainland China. During the same period, sales of priced gold jewelry in Mainland China increased from 29% in the first half of 2024 to 34%, while fixed-price gold jewelry decreased from 66% to 62%. Correspondingly, the company’s performance rebounded from the lows of 2024, when revenue was HKD 21.176 billion, down 15% year-over-year; net profit from continuing operations was HKD 772 million, down 27%. In the first half of 2025, revenue decreased by 2% year-over-year, but net profit from continuing operations increased by 80%, with gross margin rising by 5.2 percentage points to 33.5%.

However, it is important to note that while profits increased, Chow Sang Sang’s store closures accelerated. The brand operates through directly operated stores. According to the financial report, in 2024, the number of stores decreased by 44, and in the first half of 2025, the net reduction reached 62 stores. As of the end of June 2025, Chow Sang Sang had 709 stores.

Alongside store closures, the company’s sales costs, selling and distribution expenses, and financial expenses all declined, which is another key reason for the profit increase in the first half of 2025. The overall net profit growth was also driven by this factor. In the earnings announcement, Chow Sang Sang mentioned that “ongoing optimization of the retail network has reduced operating costs.”

On March 17, a reporter inquired with Chow Sang Sang staff about the proportion of revenue from priced jewelry and the number of stores as of the end of 2025, but no response was received by press time. Industry expert and founder of Huace Brand Positioning Consulting in Fujian, Jian Junhao, told Huaxia Times that “Chow Sang Sang’s doubling of performance in 2025 is mainly due to rising gold prices and the high gross margin of priced gold products, which is reasonable in the short term. However, growth heavily depends on gold price trends and the proportion of high-margin products. If gold prices fluctuate or consumer sentiment weakens, profitability could be under pressure, and sustainability is limited.”

Fashion industry expert Zhang Peiying also analyzed that “the significant growth achieved by Chow Sang Sang amid gold price fluctuations is questionable in terms of sustainability. The main reason is that performance growth still overly relies on cost-based pricing models and has not effectively transitioned to value-based pricing. Cost-based pricing is highly tied to gold prices and very sensitive to price swings. Once gold prices enter a downward trend, performance growth will likely face significant retracement pressure.”

The Road to Transformation Is Long and Difficult

In addition, Chow Sang Sang faces increasing competition pressure for priced gold products. Amid high gold prices, many gold jewelry companies are pushing into priced products. For example, Chow Tai Fook announced on March 4 that it would “continue to promote brand transformation and further enrich and strengthen priced jewelry.”

As major brands focus on priced jewelry, another industry issue has emerged—serious product homogenization. For instance, one of the classic products of traditional gold shops, the “Eight Treasures Compass,” has similar designs among Chow Sang Sang, Chow Tai Fook, Chao Hongji, and others. Jian Junhao pointed out that “the current pain points in the gold jewelry industry include severe homogenization of priced products, similar designs, and insufficient premium support. Consumers are sensitive to buyback prices. Companies should strengthen original design and cultural empowerment to create distinctive recognition; optimize pricing and value preservation services to encourage repeat purchases; and build barriers through craftsmanship, IP, and experience to escape the cycle of sameness.”

In this industry context, Chow Sang Sang’s mid-year report explicitly states that it will focus on gemstone-inlaid gold jewelry as a growth area. After the Charme series, it is actively developing another category featuring pure gold inlaid with diamonds and gemstones, characterized by diverse design themes and advanced manufacturing techniques.

Meanwhile, Chow Sang Sang is also adjusting its store network. Regarding the store reductions mentioned earlier, the company stated in its mid-year report that the Mainland China luxury market has undergone significant changes. It is repositioning its store network in the mainland by investing more resources to create stores tailored for high-end customers, aiming to enhance store atmosphere and deepen brand value. It plans to close unstrategic stores, expecting the total number of stores to decrease by about 10% by the end of the year compared to 2024.

However, transforming gold jewelry from cost-based to value-based pricing is no easy task. Zhang Peiying emphasized that “the long-term growth of gold brands fundamentally depends on building brand strength, which is the core value of enterprise development. This requires brands to carry their culture and philosophy through unique designs to create a differentiated competitive advantage. Additionally, consumer scenarios should expand beyond traditional low-frequency occasions like weddings and gifts to more everyday consumption scenarios. The key is to make the leap from ‘cost-driven’ to ‘brand-driven’ by adding cultural, design, and philosophical value anchors, encouraging consumers to pay a premium for the brand. This is a long-term and challenging task.”

责任编辑：黄兴利 主编：寒丰