According to Morgan Stanley, the soaring gold prices are "killing" the traditional gold jewellery market, with Chow Tai Seng Jewellery and Lao Feng Xiang seeing a significant decline in performance in the first quarter and accelerating store closures; however, brands focused on differentiation and high value-added products, like Lao Pu, are growing against the trend and are better able to withstand the impact of rising gold prices.
Author of this article: Zhang Yaqi.
Soaring gold prices are "killing" the traditional trinket market, reshaping the consumer structure and competitive landscape of the gold jewellery market.
Traditional trinket giants Chow Tai Seng Jewellery and Lao Feng Xiang experienced a significant decline in performance in the first quarter, with stores rapidly shrinking; meanwhile, brands like Lao Pu, focusing on differentiated and high-value-added products, achieved growth against the trend, and were better able to resist the impact of rising gold prices.
In the first quarter of 2025, Chow Tai Seng Jewellery's revenue plummeted by 47%, and net income fell by 26%; Lao Feng Xiang's revenue dropped by 32% year-on-year, with net income decreasing by 24% year-on-year. In stark contrast, Lao Pu's revenue is expected to grow by over 100% year-on-year.
According to news from the Fast Trade Platform, Morgan Stanley's latest research reports show that in a high gold price environment, brand power, innovation capability, and store operation efficiency have become key to the survival of jewellery enterprises. Data from the China Gold Association indicates that gold trinket consumption has significantly decreased in the first quarter, and Chow Tai Seng Jewellery and Lao Feng Xiang may face more store closures and profit pressure in the remaining months of this year.
Chow Tai Seng Jewellery and Lao Feng Xiang's performance has plummeted, while brands like Lao Pu have emerged as unexpected successes.
The continuously rising international gold prices are accelerating changes in the market share and profitability of traditional trinket brands. Traditional trinket giants like Chow Tai Seng Jewellery and Lao Feng Xiang are undergoing severe tests.
According to Morgan Stanley's data, in the first quarter of 2025, Chow Tai Seng Jewellery's revenue fell by 47% year-on-year, and Net income decreased by 26% compared to the previous year; Lao Feng Xiang's performance was similarly grim, with revenue declining by 32% year-on-year and Net income down by 24%.
In contrast, CHOW TAI FOOK's retail sales only fell by 11.6%, while the old shop's revenue is expected to grow by over 100% year-on-year, forming a stark comparison.
The decline in performance is also directly reflected in the contraction of the store network. Morgan Stanley noted that Chow Tai Seng Jewellery closed a net of 177 stores in the first quarter of 2025, following a net closure of 227 stores in the fourth quarter of 2024. In comparison, in the first nine months of 2024, it opened a net of 129 stores. As of March 2025, the total number of Chow Tai Seng stores was 4,831, indicating a clear contraction.
Lao Feng Xiang accelerated the pace of net store closures to 297 in the first quarter of 2025, higher than the 184 closures in the second half of 2024. Although Lao Feng Xiang plans to open 206 new stores in the remaining months of the year, the overall number of stores is still decreasing. As of March 2025, its total store count was 5,541.
Morgan Stanley's analysis suggests that in the remaining months of this year, Chow Tai Seng and Lao Feng Xiang may face more store closures and profitability pressure, as adjustments in jewelry retail companies often lag behind CHOW TAI FOOK by 6-9 months.
The rise of high gold prices: differentiated gold products are favored.
The China Gold Association recently released first-quarter domestic gold consumption data, further confirming that brands focusing on differentiated, high-value-added products are increasingly favored by consumers.
Data shows that in the first quarter, China's gold consumption fell by 5.96% year-on-year, among which gold jewelry consumption sharply declined by 26.85% year-on-year. At the same time, due to geopolitical uncertainties and increased economic downward pressure, the safe-haven and value-preserving functions of gold have become prominent, with gold bar and coin consumption rising by 29.81% year-on-year.
The World Gold Council analysis indicates that the demand for Gold trinkets continues to be weak, suppressed by high gold prices. Traditional gold, hard gold, and lightweight gold trinkets are more sought after, and products that combine gold with other materials are particularly favored by young consumers. The complex and changing geopolitical environment, along with economic uncertainty, has further highlighted gold's role as a safe haven and a store of value, leading to rapid and significant growth in demand for gold bars and coins for investment.
The rising gold prices are reshaping the consumption structure and competitive landscape of the gold jewellery market. Taking Lao Feng Xiang as an example, as one of the "most controversial jewellery stocks" at present, Morgan Stanley's research report on the 16th analyzed that the stock price trend of Lao Feng Xiang is primarily driven by the "bulls." They believe that the high-quality, high-craftsmanship, and high-emotional-value gold trinkets represented by Lao Feng Xiang are not a fleeting trend, but rather an upgrade for the entire industry.
The report states that product quality (craftsmanship), design, and product diversity are the three main factors in choosing jewelry brands, while Lao Pu Gold leads in product quality among major domestic and international jewelry brands.
