Luk Fook Hit by COVID-19 Closures

RAPAPORT... Luk Fook's same-store sales dropped 57% in the fourth fiscal quarter amid extensive retail closures for the first two months of the year and sluggish footfall in March.The jeweler saw a 60% year-on-year slide in same-store sales - at self-operated branches open for at least a year - across Hong Kong and Macau for the three months ending March 31, it reported last week. This follows the suspension of its retail network in Macau, where outlets were closed for most of February and March to stem the spread of COVID-19. In Hong Kong, where stores reopened sooner, low foot traffic also contributed to the slump.Same-store gold sales tumbled 53% in Hong Kong and Macau, while gem-set jewelry purchases slid 67%. This was partially offset by a 20% uplift in the value of gold, which boosted Luk Fook's average selling price by a similar amount. However, the jeweler permanently closed a net two of its stores in Hong Kong and another in Macau during the quarter.In mainland China, the retailer opened 26 outlets during the period, with a net addition of 287 for the full fiscal year - slightly short of the 300 it targeted. This was achieved despite a shutdown across most of the region in February, leading to a sharp dip in sales at both same-store and franchised operations.Same-store sales for self-operated shops on the mainland sank 41% compared to the same period the previous year, with revenue from gold and gem-set jewelry products falling 42% and 39%, respectively. Meanwhile, franchised stores, which account for 94% of Luk Fook's mainland operations, recorded a 34% drop in same-store gold purchases and a 29% reduction in gem-set jewelry - contributing to an overall decline of 32%.Total sales across all of Luk Fook's mainland self-operated and licensed outlets fell 50% year on year. However, the company expressed cautious optimism for the coming months."With the gradual recovery of industrial, consumption and investment activities...the group's business in mainland [China] improved progressively in the first two weeks of April," it noted.Image: A Luk Fook store at the MixC World shopping mall in Shenzhen Bay, China. (Shutterstock)