Luk Fook Sales Tank During Pandemic

RAPAPORT… Luk Fook’s sales plunged 71% in the first fiscal quarter as the coronavirus continued to reduce foot traffic and tourism.

Total same-store sales — at Luk Fook outlets open for more than a year — in Hong Kong and Macau dropped 76% in the three months ending June 30, the company said last week. Same-store sales of gold priced by weight slid 72%, while purchases of fixed-price jewelry plummeted 81%.

The Hong Kong luxury market, which relies largely on tourists from China, was heavily affected by border restrictions requiring visitors to quarantine for two weeks, bringing the number of travelers to the municipality to a near standstill. The market gradually recovered in Hong Kong in June, with the decline narrowing to 62% from 82% in April and May. Demand in Macau showed no improvement in June, the jeweler noted. The figures are for shops it operates itself, but exclude franchises.

The decline in mainland China was less extreme than in Hong Kong and Macau, as consumer sentiment began to recover after most shops reopened during the period, Luk Fook said. Overall same-store sales in the country fell 40%, with revenue from gold products falling 45% and fixed-price jewelry down 32%.

Luk Fook plans to close five shops in Hong Kong during the year, as it expects a slow recovery in the market and the tourist industry, it stated. It will open at least 150 locations in China by the end of the year. At the end of the quarter, Luk Fook had 178 self-operated stores, of which 107 were in mainland China, 49 in Hong Kong, 11 in Macau and 11 in other locations. The retailer also has 1,879 licensed shops.


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