Luk Fook Holdings (HKEx: 00590) reported that for the first quarter ending March 31, overall retail value rose 32% year-on-year and retail revenue increased 43% year-on-year, with gold and platinum products' share of retail value climbing 6 percentage points to 82% due to a significant surge in investment gold product sales, while overall same-store sales grew 39%. The Hong Kong-listed jewelry retailer's performance reflected strong consumer demand for gold products amid an elevated gold price environment and benefited from a new Mainland China value-added tax policy that widened the price differential between Hong Kong/Macau and Mainland markets, attracting more cross-border shoppers.
Luk Fook Hong Kong and Macau Same-Store Sales Surge Over 40%
During the quarter, the Hong Kong, Macau, and overseas markets' overall same-store sales improved further to 41% year-on-year growth. Hong Kong same-store sales rose 44%, Macau increased 49%, and overseas markets grew 14%. The company attributed the strong Hong Kong and Macau performance to the new Mainland VAT policy, which expanded the product price gap and attracted more consumers to purchase gold jewelry in these regions.
Mainland China Retail Value Grows 22% with Gold Products Leading
In the Mainland China market, first-quarter overall retail value increased 22% year-on-year, with gold products' retail value rising 34% while pricing jewelry products declined 15%. Mainland retail revenue climbed 41%, and the e-commerce business sales grew 39%. Overall same-store sales in the Mainland market exceeded 20% growth, with self-operated stores' same-store sales turning from negative to positive at 16% growth compared to the previous quarter.
Luk Fook Reduces Net Store Count by 148 Amid Mainland Optimization
The group re-entered the Singapore market during the quarter and opened one self-operated store, further expanding its international business footprint. Combined with one new branded store opened in Vietnam, the group added two overseas stores in the first quarter. However, as the branded store network in Mainland tier-4 and tier-5 cities continued to be optimized and consolidated, the group's global store count decreased by a net 148 stores during the quarter. As of June 30, the group operated a total of 2,857 stores worldwide.
Luk Fook Targets 2 New Countries and 30 Overseas Stores This Fiscal Year
Luk Fook stated that although gold price trends have fluctuated, consumers have gradually adapted to the high gold price environment, so this has not had a significant impact on sales. Following the implementation of the new Mainland gold VAT policy, the product price differential between the Hong Kong/Macau markets and the Mainland market has widened, attracting more consumers to purchase gold jewelry in Hong Kong and Macau, benefiting retail performance in these regions. The group remains cautiously optimistic about the Mainland market's medium- to long-term business prospects and will continue to expand the Mainland market at appropriate times. The company is optimistic about the significant development potential of overseas markets and will allocate more resources to accelerate overseas market expansion, targeting entry into at least 2 new countries and a net increase of 30 overseas stores during this fiscal year.
FAQ
What were Luk Fook's Q1 same-store sales results ending March 31?
Luk Fook reported overall same-store sales growth of 39% year-on-year for the first quarter ending March 31. Hong Kong same-store sales rose 44%, Macau increased 49%, overseas markets grew 14%, and Mainland China overall same-store sales exceeded 20% growth.
How many stores does Luk Fook operate globally as of June 30?
As of June 30, Luk Fook operated a total of 2,857 stores worldwide. The company reduced its net store count by 148 stores during the first quarter due to optimization and consolidation of its branded store network in Mainland China tier-4 and tier-5 cities, while adding two new overseas stores in Singapore and Vietnam.
