Luk Fook, a Hong Kong-based jeweler, reported a decline in revenue during the fiscal first quarter due to soaring gold prices, which dampened consumer sentiment. According to the company’s latest report, retail sales value, including self-operated and licensed shops and e-commerce platforms, dropped by 18% year-on-year for the period ending June 30. This decrease was primarily attributed to an 18% rise in the average international gold price and persistent weak demand for diamond jewelry. Additionally, comparisons with the same period last year, when Hong Kong’s borders had recently reopened and tourism was high, further impacted sales negatively.
Explaining the situation, the company noted that the increase in global gold prices, driven by central banks’ gold reserves and geopolitical tensions, reached new highs since March 2024. This escalation, particularly in April, combined with a high base effect, significantly affected the sales of gold products in the quarter.
Overall, sales declined by 31% in Hong Kong and Macau, and by 13% in mainland China. Same-store sales, which include self-operated shops open for at least a year, fell by 34% across the group, with sharper declines of 36% in Hong Kong and Macau, and 24% on the mainland. Same-store sales of gold products decreased by 33% overall, with fixed-price jewelry slipping by 36%.
In China specifically, same-store sales of gold products dropped by 19%, while fixed-price jewelry saw a 41% decrease. Within this category, gold fixed-price jewelry fell by 34%, and diamond fixed-price jewelry slid by 51%. Meanwhile, in Hong Kong, same-store sales of gold products were down by 35%, and fixed-price jewelry plunged by 38%, with gold jewelry falling by 6% and diamond jewelry by 53%.
During the April to June period, Luk Fook closed 99 stores, bringing its global total to 3,484 as of June 30.
Looking forward, the company expects sales of gold products to normalize as consumers adjust to higher prices. They also plan to actively promote non-diamond fixed-price jewelry products amid subdued demand for diamonds. Luk Fook remains optimistic about its business prospects in the mid- to long-term and will continue expanding in the mainland market.
