Rising Gold Prices and Tourism Drive Luk Fook Jewelry Sales

Retail sales at Hong Kong based jeweler Luk Fook soared in the third fiscal quarter as tourism recovered and the price of gold surged.

Sales grew 46% year on year for the three months that ended December 31, 2023, the company said last week. The rise comes on the back of a mounting revival in visitor traffic to the municipality since early last year, when the border reopened as the latest Covid-19 restrictions eased. Sales were up 40% compared to the same period of 2019, prior to the start of the pandemic.

“Following the complete reopening of borders among Hong Kong, Macau and the mainland, the Hong Kong and Macau market has shown a sustained recovery,” the company reported. “Despite an annual rise of over 14% in the average international gold price overall same store sales for gold products still displayed significant growth of 80%.”

In Hong Kong and Macau specifically, retail sales spiked 97%, with same-store sales those at branches open for at least a year gaining 80%. On the mainland, those figures increased 37% and 18% respectively.

Same store sales of gold products jumped 94% in Hong Kong and Macau, as the rising price of gold led to higher value transactions. In that category, fixed price gold jewelry as opposed to gold sold by weight rose 88%, while diamond-set jewelry went up 25%.

In China, same store sales of gold products advanced 22%. Fixed priced gold jewelry was up 23%, somewhat offsetting a 35% drop in diamond-set jewelry.

Source: Diamonds.net

Hong Kong Protests Depress Luk Fook Sales

A Luk Fook store in Hong Kong

Luk Fook’s same-store sales fell 37% in the second fiscal quarter amid protests in Hong Kong and the continued impact of the US-China trade war.

Total same-store sales — at Luk Fook outlets open for more than a year — in Hong Kong and Macau dropped 39% in the three months ending September 30. Same-store gold sales plunged 46%, while gem-set-jewelry purchases slid 26%. The figures are for shops the jeweler operates itself, excluding franchises.

The decline was the “result of high gold prices, high base effect, together with the substantial decline in the number of visitors to Hong Kong due to recent ongoing social activities,” the company noted. “Both the sales volume and average selling price of gem-set jewelry products saw a double digit drop.” Luk Fook is negotiating its rental agreement with all of its landlords in Hong Kong to avoid having to cut jobs, it said.

Overall same-store sales in mainland China slipped 25%, with revenue from gold products falling 28% and gem-set jewelry dropping 18%. While stores in mainland China showed some improvement in the first two weeks of October, sales in Hong Kong and Macau declined even further after the close of the quarter, as the tourism rate to the area continued to descend, the retailer noted. The most recent figures, reported for August, showed a 42% drop in mainland visitors to Hong Kong, according to data from the Hong Kong Tourism Board.

At the end of the quarter, 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 1,745 licensed shops.

Source: Diamonds.net