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

China Troubles Dent Luk Fook Sales

Luk Fook store China

Luk Fook’s same store sales dropped 10% in the third fiscal quarter amid economic weakness in greater China.

The depreciation of the Chinese yuan against the Hong Kong dollar led customers to purchase cheaper products in the three months ending December 31, the retailer said Thursday.

Luk Fook, one of Hong Kong’s largest jewelers, derives a significant proportion of its revenue from tourists visiting the municipality from the mainland. The weakening of the yuan during 2018 reduced the purchasing power of those consumers, causing same store sales at branches open for more than a year to fall 9% year on year in Hong Kong and Macau. Same store sales in mainland China slid 14%.

“The recent market sentiment was adversely impacted by the US China trade war, the depreciation of the yuan , and the downward pressure in the stock and property markets,” the company added.

Same-store gold sales in Hong Kong and Macau dropped 9%, while gem set jewelry purchases fell 8%. The currency effect led to a double digit decline in the average selling price of gem set products, the jeweler noted.

In China, same store sales of gold products plunged 16%, while sales of gem set jewelry decreased 5% for the period.

Luk Fook’s results are for its self operated stores, and exclude licensed shops, which form the majority of its stores on the mainland.

Source: Diamonds.net