Hong Kong Recovery Boosts Luk Fook Revenue, Profit 

Revenue at Luk Fook surged for the full fiscal year as tourism returned to Hong Kong and demand for gold products persisted. 

Sales rose 28% to HKD 15.33 billion ($1.96 billion) for the year that ended March 31, the company said last week. Sales rose 52% to HKD 10.04 billion ($1.29 billion) in Hong Kong and Macau but fell 2% in China to HKD 5.29 billion ($677 million). The strength in the municipality was due to a favorable comparison with the prior year, when the company only had two months in which tourism had resumed.  

The border between Hong Kong and China reopened in January 2023. In addition, during the current fiscal year, tourism to Hong Kong had returned in full. Growing appetite for gold, as the price strengthened, also drove sales. Profit for the year jumped 37% to HKD 1.76 billion ($225.1 million). 

“Following the borders reopening amongst Hong Kong, Macau and the mainland early last year, the retail sentiment has shown continuous improvement,” the company explained. “Furthermore, leveraging the low base effect and the outperforming gold sales, the group’s retailing business achieved satisfactory results, especially in the Hong Kong and Macau market.” 

Sales of gold and platinum products increased 51%, accounting for 73% of overall sales in Luk Fook’s retailing segment, the jeweler noted. However, sales of fixed-price jewelry slipped 3.1%, comprising 27% of sales for the retailing segment, down from 37% a year ago. That drop was due to a significant decrease in demand for diamond products. 

Group same-store sales rose 32%. Same-store sales climbed 40% in Hong Kong and declined 2.4% in China. 

The rising price of gold in the last few months of the fiscal year, along with geopolitical tensions, have weakened consumer sentiment, which impacted group sales between January and March, the company noted. The continued escalation of gold prices further affected sales, which fell approximately 35% in Hong Kong and Macau and 20% in China from the start of April until June 21. 

“Since the demand for diamond products remained subdued on the mainland, the group will continue to actively promote non-diamond, fixed-price jewelry products in order to enhance the performance of [the segment],” the company added. “Moreover, although the temporary spike in gold prices may affect sales performance, an increase in profit margin will help mitigate the impact of the decline in sales. Sales of gold products are expected to resume to normal levels after consumers adapt to the high gold prices.” 

Image: A Luk Fook store in Hong Kong. (Shutterstock)