Luk Fook’s revenues drop 17% in year ending March 2015

The board of directors of Luk Fook Holdings (International) Limited announced the annual results of the company and its subsidiaries for the year ended 31 March 2015. The Group’s revenues dropped 17.1 percent $2.48 billion (HK$15.92 billion), from (2014: HK$19.21 billion). Yet the revenues were the Group’s second highest record. The company’s overall gross margin improved by 2.2 p.p. to 24.1 percent (2014: 21.9%), which it attributes to growth in the sales mix of gem-set jewellery products.

Gross profit dropped 9.1 percent to $494 million (HK$ 3.83 billion).

Mr. Wong Wai Sheung, Chairman and Chief Executive of the Group said, “During the year under review, although the high base effect as a result of the gold rushes has faded in the second half of the year, the challenging global economy, currency depreciation and relaxed visa requirements in other popular tourist destinations hampered the consumer sentiment of Mainland Chinese tourists in Hong Kong and Macau.” He added that the company’s sales strategy, sales mix of gem-set jewellery products has been successfully increased and the growth in overall gross margin lent to profit improvement of the retail business in Mainland China.

The retail business revenues declined 22.3 percent. Gold products remained the most preferred amongst customers and together with platinum products contributed approximately 60.2 percent of the Group’s total sales. Overall same store sales growth was 28.3 percent (2014: +26.2%).

Mainland Chinese visitors continued to be the major driver for the retail business in Hong Kong. But revenues from Hong Kong dropped 20.4 percent to $1.23 billion (HK$9.51 billion). The performance of Macau market was similar to that of Hong Kong market, with a 21.5 percent drop in revenues to $292 million (HK$2.26 billion). During the year under review, the Group opened a net total of 111 shops in Mainland China, 3 shops in Hong Kong and 1 licensed shop in Korea for the first time. As at 31 March 2015, the Group had a total of 1,383 shops globally in Mainland China, Hong Kong, Macau, Korea, Singapore, the United States, Canada and Australia.