Overall sales at Luk Fook increased by 5% in the fourth fiscal quarter due to a surge in tourism to Hong Kong and a rise in the price of gold.
Strong Performance in Hong Kong and Macau
Sales in Hong Kong and Macau rose by 10% year-on-year for the period ending March 31, as reported by Luk Fook last week. This growth can be attributed to the increasing number of visitors to the region after the border reopened in 2023.
While the surge in gold prices boosted revenue in the first two months of the quarter, sales in Hong Kong saw a decline in March as gold prices reached new highs. Same-store sales of gold products increased by 5% during the quarter, but fixed-price jewelry witnessed a 24% drop. Specifically, gold products in the fixed-price jewelry category grew by 4%, while diamond items plummeted by 38%.
Favorable Sales in China
In China, sales grew by 9% year-on-year for the same period. Same-store gold sales saw a slight decrease of 3%, with fixed-price jewelry dropping by 39%. Sales of fixed-price gold products also fell by 26%, while revenue from fixed-price diamond pieces slid by 60%.
In response to the subdued demand for diamond products in China, Luk Fook plans to focus on promoting non-diamond fixed-price jewelry to improve the performance of this category. The company also expects that the improving macroeconomic conditions will contribute to the growth of its business in Hong Kong and Macau.
Outlook and Expansion
Luk Fook remains optimistic about the future, despite short-term challenges posed by high gold prices. The company anticipates that normalized gold prices will improve its gross margin and lead to a recovery in sales. During the quarter, Luk Fook added a net total of 230 new shops, reaching a total of 3,583 stores as of March 31.
