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Luk Fook’s H1 Revenue -8%, Profit -43% Amid Hong Kong Tourist Slowdown
Nov 26, 2015 10:17 AM
By Rapaport News
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RAPAPORT... Luk Fook Holdings International Limited reported revenue
declined 7.7 percent to $898.6 million (HKD 5.4 billion) in the six months to
September 30 as a result of the Chinese downturn and a weak Hong Kong tourism
industry.
Slowing growth in mainland China, currency depreciation and
the impact of relaxed visa requirements in other holiday destinations such as
Europe, Japan and Korea all hit the Hong Kong retailer’s performance, according
to a company statement November 26.
Overall revenue in Hong Kong – which makes up 60 percent of
group-wide sales – fell 6.3 percent to $542.5 million. The devaluation of
currencies against the U.S. dollar attracted tourists to shop in locations
other than Hong Kong, especially when taking long vacations. This challenge was
further intensified by poor macro-economic conditions in mainland China and
Hong Kong which damaged the luxury industry, the statement said. Macau performed
even worse than Hong Kong.
Profit for the first half slumped 43 percent to $59.8
million, in line with its profit
warning earlier this month. Its loss on exchange-rate fluctuations was $2.4
million, compared with a gain during the same period last year.
The 16 percent drop in gem-set jewelry sales to $323.3
million was the main contributor to the overall revenue decrease. However,
improved gold sales stemming from low prices of the precious metal in July and
August stymied the decline.
The group’s profit margin narrowed by 1.2 percentage points
to 23 percent due the sales mix of gold products, which was higher than
expected. Rental costs increased, mainly at the loss-making new stores in
certain prime Hong Kong locations, resulting in the ratio of operating expenses
to revenue increasing 1.6 percentage points to 14.6 percent.
Retail sales in Hong Kong, Macau and other markets fell 7.3
percent to $645.1 million, while wholesale revenue in the region plummeted 50
percent to $154.8 million. In mainland China, retail sales slipped 5.1 percent
to $73.3 million and wholesale revenue fell 8.5 percent to $133.6 million.
Inventories decreased 10 percent to $858.9 million. The
group opened a net total of 29 Luk Fook stores and four 3D-GOLD self-operated
shops through a new joint venture with a licensee in mainland China. The total
number of stores globally stood at 1,412 at September 30.
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Tags:
China, Hong Kong, Luk Fook, Luk Fook Holdings International Limited, Rapaport News, retail, tourism
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