Rising price of gold leaves hefty dent in jeweller Luk Fook’s sales
Retailer with 1,400 outlets in Asia and North America, saw same store sales decline 37 per cent in the three months to September
Surging gold prices, and a mini gold rush in 2015 have been blamed by leading Hong Kong jewellery retailer Luk Fook Holdings for a sharp fall in sales during its second quarter.
The retailer which operates over 1,400 retail outlets in mainland China, Hong Kong, Macau, Singapore and North America, saw same store sales decline 37 per cent in the three months to September (its second quarter) on the same period last year, which was weaker than expected, Bank of America Merrill Lynch analyst Tina Long said in a note.
Much of the decline was due to gold sales, which recorded a 47 per cent fall in same store sales in the second quarter year on year , worse than competitor Chow Tai Fook’s 36 per cent decline.
Sales of gemsets, items designed using various types of gem stones, fell 14 per cent, better than the 23 per cent drop seen by peers, but started moving into single digit growth in September and October.
Sales were better in the mainland than in Hong Kong and Macau, which still accounts for 75 per cent of its revenue. Mainland sales fell 23 per cent, while combined sales for Hong Kong and Macau fell 37 per cent in the second quarter.
Luk Fook’s management said in a statement the deterioration in gold sales this year was being compared with what had been a high base in 2015, thanks to the mini gold rush in July and August.