Jeweler Luk Fook Holdings has revealed its September-quarter Hong Kong sales plunged 39 percent, dragging group-wide sales down by 37 percent.
Chairman and CEO Wai Sheung Wong said in a stock-exchange filing that the decline was the result of high gold price and a strong comparative quarter last year “together with a substantial decline in the number of visitors to Hong Kong due to the recent ongoing social activities”.
Group-wide same-store sales of gold products were down 43 percent (46 percent in Hong Kong) and of gem-set jewelry by 25 percent.
He said August was the worst-performing month for the overall same-store sales in both the Mainland China and Hong Kong & Macau markets, due to the high comparative base. However, that was also the worst month of retail sales in recent years due to protest activities shutting down Hong Kong’s airport.
“Same-store sales in the first two weeks of October further declined due to [the] widened drop in the number of visitors to Hong Kong.”
Wong said Luk Fook has adopted natural turnover as a cost-saving measure for staff costs without any redundancy scheme so as to ride out the storm together with employees, meaning departing staff is not replaced.
“At the same time, the group is also proactively negotiating with all landlords in Hong Kong for rental reduction. Rental renewal depends very much on whether the relevant shop is still profitable under new rental. A single-digit drop in the rental renewal is expected for the year and a double-digit drop is expected for the next financial year,” he said.
Mainland China sales were down 25 percent, largely due to the high gold price and the macro-economic downturn in connection with the US-China trade war.