Luk Fook loses luster amid unrest

Business | Tereza Cai 18 Oct 2019

Jewelry retailer Luk Fook's (0590) overall same-store sales for the second quarter slumped 37 percent over a year earlier, with Hong Kong and Macau plunging 39 percent and the mainland falling 25 percent.

August was the worst-performing month for overall same-store sales in both markets.

The company says the decrease was due to a relatively higher base, strong gold price and the impacts of social incidents in Hong Kong and the US-China trade war on market sentiment.

The overall same-store sales of gem-set jewelry and gold products were down 43 percent and 25 percent respectively. The sales volume and average selling price for gem-set jewelry products saw a double-digit drop.

Moreover, same-store sales in Hong Kong and Macau markets declined further in the first two weeks of October due to the drop in visitors.

The group said it adopted natural turnovers as a cost-saving measure without any redundancy scheme. It is also negotiating with all landlords in Hong Kong for a rental reduction. A single-digit drop in rental renewals is expected for the year and a double-digit drop is expected next financial year.

Separately, Xtep International's (1368) same-store sales grew 10 percent year-on-year in the third quarter. It recorded a retail sell-through growth at around 20 percent year-on-year, with a retail discount level of 22-25 percent during the quarter.

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