RAPAPORT... Luk Fook Holdings’ revenues and profits soared in the fiscal year that ended on March 31, 2011, as rising Chinese demand for luxury products helped boost the Hong Kong-based company’s performance.
''The step-up in the overall performance was mainly attributable to the substantial increase in retail and wholesale volume,'' Luk Fook explained. ''Appreciation of renminbi and the PRC tourists’ rising demand for luxury products also benefited the group’s retail business.''
The company reported Wednesday that group revenues grew 50 percent year on year to $1.04 billion (HKD 8.09 billion) during fiscal 2010-11, while net profits rose 63 percent to $112.8 million (HKD 887.2 million).
Revenues generated in Hong Kong, including from its retail and wholesale operations, increased 47 percent to $756.7 million (HKD 5.89 billion) with tourists from Mainland China accounting for more than half the group’s Hong Kong retail sales. Luk Fook operated 33 retail outlets in Hong Kong at March 31, 2011 after opening four new stores during the year. Expansion has also focused on partnering with various watch brands and Luk Fook sold seven different watch brands including Longines, Tissot, Philip Stein, Mido, Hamilton, Ball and Omega, which accounted for a combined $9.2 million (HKD 71.6 million) worth of sales.
Revenues in Mainland China, where Luk Fook operates 39 stores and has 618 licensee shops, rose 64 percent to $180.2 million (HKD 1.4 billion). Revenues at the company’s Macau business, where it operates five stores, grew 51 percent to $97.8 million (HKD 760.9 million) driven by sales to Chinese tourists, Luk Fook stated. Luk Fook also operates two stores in the U.S., two in Canada and one in Singapore.
Wholesale revenues grew 23 percent to $176.8 million (HKD 1.38 billion) and licensing revenues increased 59 percent to $35.4 million (HKD 275.6 million).
Luk Fook stressed that it will focus its growth strategy on raising its presence in Mainland China by actively establishing licensee shops and self-operated stores there, as well as in Chinese tourist hot spots. ''The group holds an optimistic view towards the jewelry market in the People’s Republic of China given its vibrant economy and the huge purchasing power of its residents,'' the company explained.