Hong Kong Protests Depress Luk Fook Sales

RAPAPORT... Luk Fook's same-store sales fell 37% in the second fiscalquarter amid a decrease in inbound tourism due to escalating Hong Kong protestsand the impact of the US-China trade war. Total same-store sales - at Luk Fook outlets open for morethan a year - in Hong Kong and Macau dropped 39% in the three months endingSeptember 30. Same-store gold sales plunged 46%, while gem-set-jewelrypurchases slid 26%. The figures are for shops the jeweler operates itself, excludingfranchises. The decline was the "result of high gold prices, high baseeffect, together with the substantial decline in the number of visitors to HongKong due to recent ongoing social activities," the company noted. "Both thesales volume and average selling price of gem-set jewelry products [saw] adouble-digit drop." Luk Fook is negotiating its rental agreement with all of its landlords in HongKong to avoid having to cut jobs, it said.   Overall same-store sales in mainland China slipped 25%, withrevenue from gold products falling 28% and gem-set jewelry dropping 18%. While stores in mainland China showed some improvement inthe first two weeks of October, sales in HongKong and Macau declined even further after the close of the quarter, as the tourism rate to the area continued to descend, the retailer noted. The most recent figures, reported for August, showed a 42% drop inmainland visitors to Hong Kong, according to data from the Hong Kong TourismBoard. At the end of the quarter, 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 1,745 licensed shops. Image: A Luk Fook store in Hong Kong. (Gavincheung)