Against the backdrop of continuously rising gold prices, some gold sales companies are facing tremendous performance pressure.

On the evening of March 11, the leading domestic gold and jewelry company Lao Feng Xiang released its 2024 performance report. The report shows that in 2024, the company achieved revenue of 56.79 billion yuan, a year-on-year decline of 20.5%; the net income attributable to shareholders of the listed company was 1.95 billion yuan, a year-on-year decline of 11.95%.

This has also raised concerns among investors about the future development of the gold and jewelry industry.

Revenue and net income have fallen into the quagmire of 'double decline'.

During the reporting period, Lao Feng Xiang achieved a total operating income of 56.793 billion yuan in 2024, a year-on-year decline of 20.5%;

The net income attributable to shareholders of the listed company was 1.95 billion yuan, a year-on-year decline of 11.95%;

The net income attributable to shareholders of the listed company, excluding non-recurring gains and losses, was 1.803 billion yuan, a year-on-year decrease of 16.34%;

The total non-recurring gains and losses amounted to 0.146 billion yuan, an increase of 149.48% year-on-year, mainly due to the increase in fiscal subsidies received by the company for high-quality development projects in 2024.

The reasons for the performance changes in 2024 are mainly attributed to two aspects:

Firstly, insufficient driving force for global economic growth and lack of effective domestic demand in 2024, coupled with the continuous rise in gold prices reaching new historical highs, led to weak consumption of gold and jewelry.

According to the statistics of the China Gold Association, the gold jewelry consumption in China in 2024 was 532.02 tons, a year-on-year decrease of 24.69%. During this reporting period, the revenue and net income of Lao Feng Xiang's gold and jewelry products experienced a certain decline year-on-year.

Secondly, while the company actively promotes market expansion and improves the market layout of the "Treasure Gold" and "Fengxiang Celebration" themed stores, upgrading the new retail store theme image, due to the weak consumption of gold and jewelry, the company's outlet expansion was below expectations.

As of the end of 2024, Lao Feng Xiang had 5,838 marketing outlets both domestically and overseas, including 197 directly operated stores (of which 15 are overseas), with a net increase of 10 stores compared to the beginning of the period; and 5,641 franchise stores, a net decrease of 166 stores compared to the beginning of the period.

Consumer demand in the gold market is weak.

In 2024, the gold market in China is showing a complex trend of change. Overall gold consumption is declining, but investment demand is significantly increasing, and gold prices have also risen sharply.

Data shows that in 2024, gold consumption in China decreased year-on-year. Among them, gold jewelry was 532.02 tons, a year-on-year decrease of 24.69%; industrial and other gold use was 80.16 tons, a year-on-year decrease of 4.12%.

Against this backdrop, the performance of other listed companies, besides Lao Feng Xiang, has also declined.

On January 22, CHOW TAI FOOK released its unaudited major Company Business Data for the three months ending December 31, 2024.

Specifically, CHOW TAI FOOK Group's overall retail value decreased by 14.2%, with the mainland China market dropping by 13.0%, and the Hong Kong, Macau, and other markets falling by 20.4%. Store sales growth by product category shows that jewelry inlaid, Platinum, and K-gold jewelry in the mainland China market decreased by 20.3%, while the Hong Kong and Macau markets increased by 33.7%; gold jewelry and products in the mainland China market decreased by 15.3%, and in the Hong Kong and Macau markets, it decreased by 36.2%.

The quarterly report released by Chow Tai Seng Jewellery previously showed that for the first three quarters of 2024, it achieved revenue of 10.809 billion yuan, a year-on-year decrease of 13.49%; Net income was 0.855 billion yuan, a year-on-year decrease of 21.95%.

Due to external economic environmental factors and the rapid rise in gold market prices after the Spring Festival, there is a strong wait-and-see sentiment in gold jewelry consumption. In a challenging market environment, the company is closely following market changes and timely adjusting its product structure. The company's self-operated and e-commerce businesses have both seen growth against the trend, but revenue from franchise channels has declined due to insufficient restocking willingness from franchise customers.

Donghai Futures stated in its latest Research Report that Gold prices are expected to maintain a high level of volatility in the short term, while the long-term upward logic for gold remains unchanged. The escalation of Global trade frictions, concerns about the credit of the US dollar, and central banks' demand for gold still provide support for gold. Industry insiders also generally believe that the long-term positive trend for the Gold jewelry Industry has not changed. With the continuous development of the domestic economy and the rising income levels of residents, there is still huge development potential in the Consumer market for gold jewelry.