China Expansion Spurs Luk Fook Growth

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)