Luk Fook Sales Slide Amid Surging Gold Prices

Revenue at Hong Kong-based jeweler Luk Fook fell in the fiscal first quarter as gold prices soared, dampening consumer sentiment. 

Retail sales value — at self-operated and licensed shops and on e-commerce platforms — decreased 18% year on year for period that ended June 30, the company reported last week. The drop was due to an 18% increase in the average international gold price as well as continued weakness in demand for diamond jewelry. Additionally, an unfavorable comparison with the same period last year, when Hong Kong’s borders had just reopened and tourists flocked to the municipality to purchase luxury goods, dented sales. 

“The increase in central banks’ gold reserves and ongoing worldwide geopolitical tensions have driven gold prices to new highs since March 2024,” the company explained. “The continued escalation of gold prices in April and the high base effect further impacted the sales performance of gold products in the quarter.” 

Overall sales declined 31% in Hong Kong and Macau and 13% in mainland China.  

Same-store sales — at self-operated shops that were open a year earlier — fell 34% for the group, down 36% in Hong Kong and Macau and 24% on the mainland. Same-store sales of gold products retreated 33% overall, while fixed-price jewelry slipped 36%. 

In China, same-store sales of gold products dropped 19%. Fixed-price jewelry decreased 41%. Of that, gold fixed-price jewelry fell 34%, while diamond fixed-price jewelry slid 51%. Meanwhile, in Hong Kong, same-store sales of gold products were down 35%. Fixed-price jewelry plunged 38%, with a 6% drop in gold jewelry and a 53% tumble in diamond jewelry.  

During the three months from April to June, Luk Fook closed 99 stores, putting its June 30 global total at 3,484. 

“Although the temporary spike in gold prices may affect sales performance…sales of the gold products are expected to resume to the normal levels after consumers adapt to the high gold prices,” the company explained. “Moreover, since the demand for diamond products remains subdued, the group will continue to actively promote non-diamond fixed-price jewelry products. The group remains optimistic about its mid- to long-term business prospects and will continue to expand in the mainland market.”  

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