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China Expansion Spurs Luk Fook Growth

Performance weakened in second half due to trade war.
Jul 1, 2019 5:04 AM   By Rapaport News
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RAPAPORT... Luk Fook’s revenue and profit grew in fiscal 2019, driven by an expansion of its network in mainland China.

Overall revenue for the Hong Kong-based jewelry retailer rose by 9% to HKD 15.86 billion ($2.03 billion) in the year ending March 31, it reported last week. Net profit grew 10% to HKD 1.5 billion ($192.6 million).

The company’s retail revenue in mainland China rose 18% to HKD 6 billion ($769.3 million), although same-store sales at branches open for at least a year slid 2.6%. Licensing income increased by 23.5% to HKD 807 million ($103.3 million) over the year following a net addition of 197 new shops, 194 of which were in mainland China. The retailer also added three self-operated stores, in Hong Kong, Macau and Malaysia — taking the total number of shops to 1,828.

In Hong Kong, the jeweler’s revenue grew 3% to HKD 7.63 billion ($977.6 million), with same-store sales rising 4.6%. The company has operations in other countries including Macau, Singapore, Malaysia, Cambodia and the US. Group same-store sales inched up 3.1%.

Same-store sales for gold and platinum products increased 4.4%, the retailer reported, while those for gem-set jewelry items moved upward by 1.4%. Total sales of gold and platinum products grew by 0.9% to HKD 7.8 billion ($998.6 million), constituting 52% of overall sales. Gem-set jewelry sales increased 17% to HKD 7.26 billion ($929.2 million), accounting for the remainder of overall sales.

Luk Fook’s performance slowed in the second half of the year due to the “adverse impact” of the US-China trade war on macro-economic conditions, management explained.

Image: A Luk Fook store in Hong Kong. (Shutterstock)
Tags: diamonds, Hong Kong, Jewelry, Luk Fook, Rapaport News
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