China Troubles Hit Luk Fook

RAPAPORT... Luk Fook's same-store sales dropped 10% in the third fiscal quarteramid economic weakness in greater China. The depreciation of the Chinese yuan against the Hong Kong dollarled customers to purchase cheaper products in the three months ending December31, the retailer said Thursday. Luk Fook, one of Hong Kong's largest jewelers, derives asignificant proportion of its revenue from tourists visiting the municipalityfrom the mainland. The weakening of the yuan during 2018 reduced the purchasingpower of those consumers, causing same-store sales - at branches open for morethan a year - to fall 9% year on year in Hong Kong and Macau. Same-storesales in mainland China slid 14%. "The recent market sentiment was adversely impacted by theUS-China trade war, the depreciation of the [yuan], and the downward pressurein the stock and property markets," the company added. Same-store gold sales in Hong Kong and Macau dropped 9%,while gem-set jewelry purchases fell 8%. The currency effect led to adouble-digit decline in the average selling price of gem-set products, thejeweler noted. In China, same-store sales of gold products plunged 16%, while sales ofgem-set jewelry decreased 5% for the period. Luk Fook's results are for its self-operated stores, and excludelicensed shops, which form the majority of its stores on the mainland. Image: A Luk Fook store in China. (Luk Fook)