Luk Fook will add at least 150 stores in Mainland China this year as it looks to mitigate falling sales in Hong Kong.
Releasing its results for the financial year to March 31, Luk Fook said profit attributable to shareholders rose 9 per cent to HK$1.5 billion on sales up 8.8 per cent to $15.9 billion.
During the year the company added 194 stores on the mainland taking its global network to 1833.
“As Mainland China remains to be a market with promising growth potential in the mid- to long-term, the group will continue to focus on business expansion [there],” said Luk Fook chairman and CEO Wai Sheung Wong.
“The target for net addition of shops in Mainland China in the coming year, including newly developed brands, is not less than 150 shops and will expand its network to lower-tier cities by opening mainly licensed shops. The group is also committed to further developing its e-commerce business and strengthening cooperation with e-commerce platforms in Mainland China, aiming to grow e-commerce revenue by 20 per cent,” he said.
“In light of the enormous spending potential of young consumers on online sales platforms, the group will step up its efforts to promote the sales of affordable luxury jewellery products to expand its footprint in the young consumer market.”
Last year was one of two differing halves for Luk Fook, the first half of growing sales in Hong Kong and Macau, the second of declining sales as trade tensions grew between China and the US and consumer sentiment dived. That trend continued from April through to three weeks into this month with same-store sales in Hong Kong and Macau down by the low-double digits and on the mainland by the mid-single digits for company-owned stores and low-single digits for licensed shops.
Given the continuing uncertainties on the macro-economic environment arising from the US-China trade war, Luk Fook expects “flattish” revenue and profit growth for the current financial year, but hopes to maintain profitability at last year’s level.
Last year, the retail business was Luk Fook’s main source of revenue, rising by 9.8 per cent
Year on year to $12.075 billion and accounting for 76.1 per cent of total sales.
The group’s retail revenue in the Hong Kong market increased by 11.6 per cent to $7.44 billion, despite a lacklustre second half.