Gold up fifty, diamonds down fifty-eight: Luk Fook's split quarter

§1Two companies, one filing.

Luk Fook's first fiscal quarter reads like two companies filing one report. For the three months to June 30, the Hong Kong jeweler's retail sales rose 32% year over year and group same-store sales gained 39%, with Hong Kong and Macau up 41% and the mainland up 22%. Strip out the shine, though, and the quarter splits cleanly along product lines: gold same-store sales surged 50%, while diamond same-store sales fell 17%. On the mainland, the diamond number was a startling minus 58%.

§2The customer stopped waiting.

The gold side of the ledger no longer even blames the price. Same-store gold sales rose 55% in Hong Kong and Macau and 21% on the mainland, and the company observed that "consumers have gradually adapted to the high gold price environment". That is the quiet capitulation the trade has been waiting three years to hear: the customer has stopped treating four-thousand-dollar gold as a reason to wait, and started treating it as the reason to buy.

Across town, Chow Sang Sang told the same story at a lower amplitude. Retail sales value rose 16% for the June quarter, with same-store sales up 17% in China and 30% in Hong Kong and Macau, driven by steady local demand and returning tourist traffic. Gold jewelry held its bid throughout; the company credited its signature collections for keeping customers at the counter through the price swings.

§3Fewer, better doors.

What neither company is doing is opening stores. Luk Fook closed a net 148 locations in the quarter, taking its global count to 2,857, even as it opened a self-operated store in Singapore, launched a licensed shop in Vietnam, and penciled in 30 net new overseas stores across two more countries for the fiscal year. Chow Sang Sang closed a net 49 shops in the first half, ending June at 776. The playbook on both sides is identical: fewer, better doors, and a counter that sells metal first.