Luk Fook announces interim results

 Luk Fook announces interim resultsThe Board of Directors of Luk Fook Holdings (International) Limited announced the unaudited consolidated interim results of the company and its subsidiaries for the six months ended 30 September 2016.

During the Period under review, the Group’s revenue dropped 21.5 percent to HK$5,469,124,000. The continuing weak retail sentiment, together with the relatively high gold price and a relatively high base due to the small scale gold rush in certain months last year, resulted in gold sales falling more than expected.

Overall gross margin improved by 5.3 p.p. to 28.0% as a result of relatively high gold price and higher gem-set jewellery sales mix. Gross profit therefore decreased by only 3.0 percent to HK$1.5 billion.

Operating profit decreased by 6.0% to HK$558 million. Profit attributable to equity holders amounted to HK$429 million, a decrease of 7.4 percent. The Group’s overall gross margin significantly improved by 5.3 p.p. to 28.0 percent, as it concentrated on sales mix of gem-set jewellery products driven by a slowdown in demand for gold products and the improved gross margin of gold products as a result of the gold price rise.

Mr. Wong Wai Sheung, Chairman and Chief Executive of Lukfook Group said, “During the Period under review, the slowdown in economic growth in Mainland China, the changes to the Individual Visit Scheme and the growing popularity of other tourist destinations as a result of currency devaluation, Mainland tourists tended to stay shorter period of time. Consumption expenditure per capita continued to fall with the poor macro-economic conditions and decreased spending power of consumers. ”

The retail business continued to be the primary revenue source for the Group with its revenue declined year-on-year by 27 percent to HK$4,028,721,000, accounting for 73.7 percent (2015: 79.3 percent) of the Group’s total revenue. With a much improved gross margin, segmental profit in the retail business dropped by 6.7% only to HK$338,921,000 (2015: HK$363,235,000), representing 55.8% (2015: 53.9%) of the total.

The overall same store sales growth of the Group was down 31.5 percent.

The Hong Kong market remained to be the key source of revenue for the Group, which the revenue generated decreased by 28.6 percent to HK$3,003,443,000, contributing approximately 54.9 percent (2015: 60.4 percent) of the Group’s total revenue. The Group’s revenue generated from the Macau market decreased by 27.7 percent to HK$665,528,000. Revenue from the Mainland China market decreased by 2.7 percent to HK$1,722,787,000, and accounted for 31.5 percent (2015: 25.4 percent) of the Group’s total revenue.

During the Period under review, the Group added a net total of 27 Lukfook shops worldwide of which 24 new stores were opened in Mainland China. This raises the global network of Lukfook shops to 1,455. Mr. Wong Wai Sheung, Chairman and Chief Executive of the Group said, “Looking ahead, the Group will maintain its pragmatic and prudent strategies, proactive response to challenges, thereby strengthening our leading position in the jewellery retail market.”

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