FAST NEWS: High gold prices dampen Luk Fook’s business
The Latest: Jeweler Luk Fook Holdings (International) Ltd. (1361.HK) said on Thursday its retailing revenue in the second quarter of its fiscal year through September fell 25% year-on-year, citing a high base effect from the year-ago period and slumping demand due to record high gold prices.
Looking Up: At the end of September, the jeweler had 3,408 stores worldwide, a net reduction of 76 from the end of June, as it closed poorly performing locations to reduce operating costs.
Take Note: The company’s same-store sales plunged 35% during the period, with Hong Kong and Macau down 38% and Mainland China down 29%.
Digging Deeper: A designer and seller of gold and platinum jewelry, Luk Fook was established in 1991 and went public in 1997. It completed its acquisition of the 3D-Gold brand from HK Resources (2882.HK) earlier this year, bringing 218 3D-Gold stores under its umbrella, which helped to boost its revenue by 12% year-on-year in its fourth fiscal quarter March. The company pointed out that demand for diamond-based products has been weak lately, prompting it to promote other products to improve its performance.
Market Reaction: Luk Fook shares opened slightly higher on Friday and closed up 1.4% at HK$14.95 by the midday break. The stock now trades at the lower end of its 52-week range.
Translation by A. Au
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