Easing price of gold gives Luk Fook sales some shine

Luk Fook achieved same-store sales growth of 14 per cent in its latest quarter, thanks to lower gold prices, good market sentiment and a successful sales strategy. In a note to shareholders, chairman and CEO Wai Sheung Wong said same-store sales of gold products rose by 23 per cent and of gem-set jewellery by 5 per cent.

Luk Fook Hong Kong and Macau sales led the way, rising 17 per cent, with gold products up 30 per cent, during the three months to September 30.

However, depreciation of the Renminbi led to a higher tendency for customers to purchase lower-value items, resulting in a single-digit drop in the average selling price of gem-set jewellery products.

The jeweller’s fortunes appear to have endured after the quarter ended.

“In the first two weeks of October, the growth momentum of Hong Kong and Macau market

continued, with same-store sales sustained at a double-digit growth. As for the mainland market, because of the large number of outbound travellers during the long holiday period and a high base, same-store sales of self-operated shops recorded a double-digit drop in the first two weeks of October,” said Wong.

During the quarter, there was a net addition of 57 Lukfook shops on the mainland: 62 more licensed shops and five fewer self-operated shops.

At the end of the quarter, Luk Fook had 223 self-operated shops, including 151 in Mainland China, 50 in Hong Kong, 11 in Macau and 11 overseas. It had a further 1500 licensed shops on the mainland, one in Cambodia and one in the Philippines, taking the total network to 1725.