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Hong Kong Troubles Weigh on Luk Fook

Revenue falls 20% in fiscal first half.
Dec 1, 2019 9:59 AM   By Rapaport News
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RAPAPORT... Luk Fook’s sales fell 20% in the first fiscal half amid uncertainty in the Hong Kong market and the rising price of gold.

Total sales dropped to HKD 6.31 billion ($805.5 million) in the six months ending September 30. Profit for the period slipped 26% to HKD 497.3 million ($63.5 million).

Same-store sales — at Luk Fook outlets open for more than a year — in Hong Kong and Macau slid 25% in the six months ending September 30, excluding franchises. Same-store gold sales plunged 34%, while gem-set jewelry purchases declined 10%. 

The decline was the “result of a relatively high base, strong gold prices, and the continuing impact of Hong Kong social incidents and [the] US-China trade war on market sentiment,” the company noted. “Consumption expenditure per capita in the Hong Kong and Macau market has been weakening, [causing a] substantial decline in the number of visitors to Hong Kong. The overall retail atmosphere has been weakening continuously in recent months.”

Overall same-store sales in mainland China slipped 16%, with revenue from gold products falling 17%, and gem-set jewelry dropping 12%.

The number of visitor arrivals in Hong Kong decreased considerably in July, August and September, with numbers down 5%, 39% and 34% for each month, respectively. In the first half of the year, arrivals increased 14%, according to the Hong Kong Tourism Board.

At the end of the first half, Luk Fook had 210 self-operated stores, of which 136 were in mainland China, 51 in Hong Kong, 12 in Macau, and 11 in other locations. The retailer also has 1,747 licensed shops.

Image: A Luk Fook store in Hong Kong. (Luk Fook)
Tags: Hong Kong Tourism Board, Luk Fook, Rapaport News, US-China trade war
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