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RAPAPORT... Luk Fook Holdings Company Ltd. reported that revenue plunged 25.1 percent year on year to $973 million (HKD 7.542 billion) in the first half that ended on September 30. Same-store sales fell 41 percent, but comparisons were difficult this year due to a "gold rush" in 2013 that drove comparable-store sales up 64.4 percent in the first half. Same-store sales for gold and platinum products declined 50.1 percent this year, while they fell 12.9 percent for gem-set jewelry products. Profit attributable to equity shareholders dropped 16.6 percent to $104 million (HKD 804.6 million). Still, the board was eager to declare an interim dividend of 7 cents (HKD 0.55) per ordinary share, down from 8 cents (HKD 0.63) one year earlier. Revenue from the group's retail business fell 31.7 percent year on year to $761 million (HKD 5.9 billion), however, sales from the wholesale business increased 23.4 percent to $176 million (HKD 1.4 billion). Licensing revenue fell 13.1 percent to $36 million (HKD 281 million). Luk Fook's Hong Kong operations recorded a 30.5 percent decrease in revenue to $578 million (HKD 4.5 billion), while sales from Macau fell 22.5 percent to $142 million (HKD 1.1 billion) and sales across Mainland China dropped 10.7 percent to $243 million (HKD 1.9 billion). Wong Wai Sheung, the CEO of Luk Fook, explained that revenue and profit attributable to equity holders reached the second-highest on record. "Under the high base effect last year, overall gross margin improved with successful strategies from increasing the mix of gem-set jewelry products. We have also successfully expanded the business in Mainland China, which is a strategic move to lower reliance on Hong Kong and Macau markets,” Sheung said. Looking forward, Luk Fook is cautiously optimistic for the second half of the fiscal year given softer prices in gold, coupled with the “double spring” and a “leap month” in the Chinese calendar. Sheung explained that Luk Fook would proactively utilize cross-selling techniques to enhance the sales of gem-set jewelry products. "With the 'Occupy Central' movement going on in Hong Kong and the lowered spending power of customers, both the same-store sales and the year-on-year retail sales of the Hong Kong market experienced a single-digit drop in October," Sheung explained. "Nevertheless, with the continuously low gold prices, November’s sales were picking up growth momentum. Looking forward, the group will take a pragmatic and prudent approach in the course of developing our business and will also take an active role to seize business opportunities in the face of market challenges, thereby uplifting its competitive advantage and strengthening its leading position in the international jewelry retail market.”
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