Surging Gold Demand Boosts Luk Fook Sales

Overall sales at Luk Fook grew 5% in the fourth fiscal quarter as the influx of tourism to Hong Kong returned to normal and the price of gold soared. 

Sales in Hong Kong and Macau climbed 10% year on year for the three months ending March 31, Luk Fook said last week. The growth is attributable to a consistent rise in the number of visitors to the municipality following the reopening of its border at the start of 2023.  

However, while the rising price of gold buoyed revenue in January and February, sales in Hong Kong began to falter in March as gold prices reached new highs, the company noted. Same-store sales of gold products climbed 5% during the quarter, while fixed-price jewelry slid 24%. In the fixed-price-jewelry category, gold products grew 4% while diamond items plunged 38%. 

In China, sales were up 9% year on year for the period. Same-store gold sales slipped 3%, with fixed-price jewelry down 39%. Sales of fixed-price gold products dropped 26% on the mainland. Revenue from fixed-price diamond pieces slid 60%. 

“Since the demand for diamond products remains subdued in the mainland, the group will continue to actively promote non-diamond fixed-price-jewelry products in order to enhance the performance of fixed-price-jewelry products,” the company said. “Moreover, the ongoing improvement in macroeconomic conditions will help to boost the business growth of the Hong Kong and Macau market. Furthermore, the high gold price will affect sales performance in short-term, but this could also help to improve the group’s gross margin. Sales will be recovered while gold prices become normalized.” 

Luk Fook opened a net 230 shops during the quarter, bringing its total to 3,583 stores as of March 31. 

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