Surge in Gold Prices Hits Luk Fook Revenue
November 30, 24
(IDEX Online) - Luk Fook reported a 27 per cent slump in its half-year revenue and the closure of 175 of its 3,500-plus retail jewelry stores amid a surge in gold prices and weak consumer demand.
Earnings for the six months to 30 September were down to $700m. The Hong Kong-based jewelry chain blamed: "various challenges including macroeconomic uncertainties, further rising gold prices and cautious consumer sentiment, coupled with a high base effect".
Luk Fook said the sharp rise in gold prices - an increase of 23 per cent during the six months - affected consumer sentiment, resulting in a 24 per cent drop in the sales of gold and platinum products. Overall same stores sales were down 34 per cent.
CEO Wong Wai Sheung said: "Although the spike in gold prices may affect sales performance, an increase in profit margin will help mitigate the impact of the decline in sales.
"Sales of the gold products are expected to resume to the normal levels after consumers adapt to the high gold prices.
Gross profits for the six months were down 14 per cent to $228m, net profit fell 56 per cent to $54m.
In March, Luk Fook reported a 28 per cent increase in revenue, driven by a post-Covid influx of tourists.