Revenue and profit at Luk Fook dropped for the full fiscal year as consumer demand for gold products waned in the wake of record-high prices.
Sales fell 13% to HKD 13.34 billion ($1.7 billion) for the year that ended March 31, the company said last week. Sales declined 20% to HKD 8.07 billion ($1.03 billion) in Hong Kong and Macau, and were flat in China at HKD 5.27 billion ($671.8 million). The better result on the mainland was due to an increase in the purchasing of fixed-price gold products and the launch of new collections, the company noted.
Meanwhile, profit decreased 39% to HKD 1.07 billion ($136 million) for the year. The retailer suffered gold-hedging losses of HKD 493 million ($62.8 million), which a one-off gain from an acquisition partially offset. Excluding those two factors, profit was down 6%, the company said.
“During the year under review, the average international gold price in USD per ounce increased nearly 30% year-on-year,” Luk Fook stated. “The high gold price affected consumer sentiment.”
However, revenue improved during the second half, as consumers began to adapt to the higher gold prices, Luk Fook added. The jeweler reported that demand for diamond products on the mainland remained sluggish.
Sales of gold and platinum products dropped 15%, accounting for 71% of overall sales in Luk Fook’s retailing segment, the jeweler said. Sales of fixed-price jewelry fell 8%, comprising 29% of sales for the retailing segment, up from 27% a year ago.
Group same-store sales declined 25%. Same-store sales slipped 26% in Hong Kong and 12% in China. During the year, the company closed a net 296 shops, leaving it with a global network of 3,287. It intends to open a net 50 locations in China in the coming fiscal year, as well as approximately 20 shops overseas, it said.
Image: A Luk Fook store in Hong Kong. (Shutterstock)
