Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

SALES PERFORMANCE OF RETAIL BUSINESS

FOR THE SECOND QUARTER OF FINANCIAL YEAR

ENDING 31 MARCH 2020

Luk Fook Holdings (International) Limited (the "Company"), together with its subsidiaries (the "Group"), announces the sales performance of retail business of the Group's self-operated shops for the second quarter ("2Q") of financial year ending 31 March 2020 ("FY2020") covering the period from 1 July 2019 to 30 September 2019.

SAME STORE SALES GROWTH ("SSSG")* FOR 2Q OF FY2020

2Q FY2020

1Q FY2020

2Q FY2019

vs

vs

vs

2Q FY2019

1Q FY2019

2Q FY2018

Overall

-37%

-10%

+14%

Gold

-43%

-19%

+23%

Gold (by weight)

-53%

-19%

+30%

Gem-set jewellery

-25%

+4%

+5%

Hong Kong & Macau

-39%

-10%

+17%

Gold

-46%

-20%

+30%

Gold (by weight)

-55%

-20%

+36%

Gem-set jewellery

-26%

+6%

+4%

Mainland China

-25%

-7%

+4%

Gold

-28%

-4%

-

Gold (by weight)

-44%

-12%

+4%

Gem-set jewellery

-18%

-7%

+18%

Remarks:

  • Same store sales growth of the period represented a comparison of sales of the same Lukfook self-operated shop having full day operations in the comparable periods and such data did not include sales of licensed shops and Mainland China's e-commerce business.

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With a relatively higher base, strong gold price, and the continuing impact of social incidents in Hong Kong and US-China trade war on market sentiment, the SSSG of the Group's retail business for 2Q FY2020 was -37%. The overall SSSG of gold products and gem-set jewellery products were -43% and -25% respectively. Attributed by the highest base month in 2Q, August was the worst performing month for the overall SSSG of both Mainland China ("Mainland") and Hong Kong & Macau markets.

The SSSG of Hong Kong & Macau market for 2Q FY2020 was -39% as a result of high gold price, high base effect, together with substantial decline in the number of visitors to Hong Kong due to the recent ongoing social activities. Its SSSG of gold products and gem-set jewellery products were -46% and -26% respectively. Both the sales volume and average selling price ("ASP") of gem-set jewellery products was a double-digit drop. Same store sales in the first two weeks of October further declined due to widened drop in the number of visitors to Hong Kong. The Group has adopted natural turnover as a cost-saving measure for staff costs without any redundancy scheme so as to ride out the storm together with employees. At the same time, the Group is also proactively negotiating with all landlords in Hong Kong for rental reduction. Rental renewal depends very much on whether the relevant shop is still profitable under new rental. A single-digit drop in the rental renewal is expected for the year and a double-digit drop is expected for the next financial year.

Because of the high gold price and the macro economic downturn in connection with the US-China trade war, the SSSG of Mainland market for 2Q FY2020 was -25%. Its SSSG of gold products and gem-set jewellery products were -28% and -18% respectively. The sales volume of gem-set jewellery products was a double-digit drop, while its ASP was a single-digit growth. Besides, Mainland licensed shops recorded a low double-digit same store sales decline, while its same store sales of gem-set jewellery products was a low single-digit drop during the period. The same store sales of both self-operated shops and licensed shops showed some improvements in the first two weeks of October against 2Q.

NUMBER OF SHOPS

Driven by the Group's multi-brand strategy, apart from the net addition of 94 "Lukfook" shops in Mainland (which included a net addition of 95 licensed shops and net decrease of 1 self-operated shop), there were an addition of 5 "Goldstyle" shops (including 1 self-operated shop and 4 licensed shops) and 1 "Dear Q" self-operated shop, with a reduction of 1 "3D-GOLD"self-operated shop in Mainland during 2Q. As at 30 September 2019, the Group had an operation of 1,881 "Lukfook" shops, 6 "Goldstyle" shops, 3 "Dear Q" shops, and 4 "3D-GOLD" shops, totalling 1,894 shops in Mainland market. It is expected that the net shop additions in the Mainland market for FY2020 will be at least 200 shops, most of which would be licensed shops at low-tier cities. The details of distribution network in Mainland are summarised as follows:-

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MAINLAND DISTRIBUTION NETWORK

Shop number

of different

Changes in

Changes in

30 September

brands

1Q FY2020

2Q FY2020

2019

(Revised)

Lukfook

Self-operated

-4

-1

136

Licensed

36

95

1,745

Sub-total

32

94

1,881

Goldstyle

Self-operated

-

1

1

Licensed

1

4

5

Sub-total

1

5

6

Dear Q

Self-operated

2

1

3

3D-GOLD

Self-operated

-

-1

4

Total

Self-operated

-2

-

144

Licensed

37

99

1,750

Total

35

99

1,894

As at 30 September 2019, the Group had a total of 210 "Lukfook" self-operated shops including 136 in Mainland, 51 in Hong Kong, 12 in Macau, and 11 overseas. As at the same date, together with licensed shops of 1,745 in Mainland, 1 in Cambodia, and 1 in the Philippines, there were a total of 1,957 "Lukfook" shops worldwide. Together with shops of other brands in Mainland, the Group had a total of 1,970 shops globally. The Group's global distribution network of "Lukfook" shops is summarised as follows:-

GLOBAL DISTRIBUTION NETWORK OF "LUKFOOK" SHOPS

30 September 2019

Changes in

2Q FY2020

Self-operated shops

Hong Kong

51

4

Macau

12

1

Mainland

136

-1

Other Locations

11

-

Sub-total

210

4

Licensed shops

Mainland

1,745

95

Other Locations

2

-

Sub-total

1,747

95

Total "Lukfook" shops

1,957

99

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CAUTION STATEMENT

The board of directors of the Company wishes to remind investors that the above operational data is based on the Company's internal records which have not been audited by auditors.

Shareholders and potential investors are advised to exercise caution when dealing in the shares of the Company.

By Order of the Board

Luk Fook Holdings (International) Limited

WONG Wai Sheung

Chairman & Chief Executive Officer

Hong Kong, 17 October 2019

As at the date of this announcement, the Company's Executive Directors are Mr. WONG Wai Sheung (Chairman and Chief Executive Officer), Mr. TSE Moon Chuen (Deputy Chairman), Ms. WONG Hau Yeung, Ms. WONG Lan Sze, Nancy and Dr. CHAN So Kuen; the Non-executive Directors are Mr. WONG Ho Lung, Danny (Deputy Chairman), Ms. YEUNG Po Ling, Pauline, Mr. HUI Chiu Chung, JP and Mr. LI Hon Hung, BBS, MH, JP; the Independent Non-executive Directors are Mr. TAI Kwok Leung, Alexander, Mr. IP Shu Kwan, Stephen, GBS, JP, Mr. MAK Wing Sum, Alvin, Ms. WONG Yu Pok, Marina, JP and Mr. HUI King Wai.

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Luk Fook Holdings (International) Ltd. published this content on 17 October 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 October 2019 09:08:02 UTC