CaratSame-store, plus 39%: Hong Kong's gold counters run hot
Luk Fook's June quarter: retail value +32%, gold product sales +50% same-store — while diamond sales fell 17%, and 58% on the mainland. Chow Sang Sang adds +16%. A mainland VAT change is pushing buyers across the border.
§1Two chains, one quarter.
Hong Kong's jewelry chains just reported the kind of quarter that makes a strange market look simple: sell gold, and sell it where the tax is lower. Luk Fook's retail sales value rose 32% in the quarter ended June 30, Rapaport reported, with group same-store sales up 39% — split between a 41% surge in Hong Kong and Macau and a 16% rise on the mainland. Chow Sang Sang, reporting the same week, posted a 16% gain in quarterly retail value, with same-store sales up 30% in Hong Kong and Macau and 17% in mainland China.
§2Gold 50, diamonds minus 17.
The product mix behind those numbers is lopsided to the point of caricature. Luk Fook's gold product same-store sales rose 50% — 55% in Hong Kong and Macau, 21% on the mainland — as consumers kept treating the metal as an investment despite a volatile tape. Same-store diamond sales fell 17% group-wide, and collapsed 58% in mainland China. Chow Sang Sang described gold demand as steady through the price swings, leaning on its signature collections.
More sales through fewer doors is the strategy on both sides — the physical network consolidating around the customers who still show up, checkbook in hand, for gold.
Policy is doing some of the pushing. A new value-added tax treatment on the mainland widened the price gap between mainland counters and Hong Kong's, and customers responded the way arbitrage always responds: by getting on a train. The border cities are collecting the difference — one more reason Hong Kong and Macau same-store growth is running at more than double the mainland's at both chains.
§3Fewer doors, more sales.
Both retailers are shrinking their way to these numbers. Luk Fook closed a net 148 shops in the quarter to stand at 2,857 worldwide; Chow Sang Sang has closed a net 49 this year and operates 776, with management prioritizing store productivity and prime locations. More sales through fewer doors is the strategy on both sides — the physical network consolidating around the customers who still show up, checkbook in hand, for gold.
The gold counter is eating the diamond counter's lunch in Greater China, and the mainland's −58% diamond print is the loudest number on this week's tape.
Until the diamond case earns back its investment story, the region's jewelers will keep being gold dealers with very good lighting.
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America's version: +8.6% revenue on a 19% higher ticket