Hong Kong Troubles Weigh on Luk Fook

RAPAPORT... Luk Fook's sales fell 20% in the first fiscal half amiduncertainty in the Hong Kong market and the rising price of gold. Total sales dropped to HKD 6.31 billion ($805.5 million) inthe six months ending September 30. Profit for the period slipped 26% to HKD497.3 million ($63.5 million). Same-store sales - at Luk Fook outlets open for more than ayear - in Hong Kong and Macau slid 25% in the six months ending September 30, excluding franchises.Same-store gold sales plunged 34%, while gem-set jewelry purchases declined10%. The decline was the "result of a relatively high base,strong gold prices, and the continuing impact of Hong Kong social incidents and [the] US-China trade war on market sentiment," the company noted. "Consumptionexpenditure per capita in the Hong Kong and Macau market has been weakening,[causing a] substantial decline in the number of visitors to Hong Kong. Theoverall retail atmosphere has been weakening continuously in recent months." Overall same-store sales in mainland China slipped 16%, withrevenue from gold products falling 17%, and gem-set jewelry dropping 12%. The number of visitor arrivals in Hong Kong decreased considerably in July, August and September, with numbers down 5%, 39% and 34% for each month, respectively. In the first half of the year, arrivals increased 14%, according tothe Hong Kong Tourism Board. At the end of the first half, Luk Fook had 210 self-operatedstores, of which 136 were in mainland China, 51 in Hong Kong, 12 in Macau, and11 in other locations. The retailer also has 1,747 licensed shops. Image: A Luk Fook store in Hong Kong. (Luk Fook)