Luk Fook Suffers as Tourists Snub Hong Kong

RAPAPORT… Sales at Luk Fook slumped in the second fiscal quarter as the Hong Kong-based jeweler suffered from a continued slowdown in tourism and local demand in its home city.

Group-wide same-store sales — at branches open for at least a year — fell 55% year on year during the three months ending September 30, the retailer reported Friday. This reflected a 63% slide in Hong Kong and Macau.

“It is expected to take time for mainland tourist arrivals to Hong Kong — and the retail atmosphere — to recover,” the company added.

Hong Kong’s tourism industry, an important source of luxury sales, almost ground to a halt this year due to coronavirus-related quarantine rules for visitors. Meanwhile, a second outbreak in Hong Kong this summer dampened local consumer sentiment.

Business in mainland China failed to compensate for this, with same-store sales down 15% at Luk Fook’s self-operated locations and down 4% at licensed shops.

However, the declines narrowed compared with the previous quarter as border restrictions eased and China brought the virus further under control, with the improvement continuing into October.

Same-store sales in Hong Kong recovered to a 20% year-on-year drop in the first week of October, while in Macau the figure was steady at a fall of around 50%. Meanwhile, same-store sales at self-operated shops in China slid by a double-digit percentage in July and August, but improved to a high single-digit decrease in September and went down by low single digits in the first week of October.

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