CaratFifty percent on fixed price: how Luk Fook outran the gold price
Net profit rose 88.7% to HK$2.015 billion in the year to 31 March, on revenue up 29% to HK$17.21 billion. Fixed-price jewellery sales rose 50.5% against 22% for gold and platinum by weight.
§1The number that did not travel.
Luk Fook's full-year figures have been public since late June, and the number that explains them has not travelled. In the year to 31 March 2026 the Hong Kong group's net profit rose 88.7% to HK$2.015 billion, its highest on record, on revenue up 29% to HK$17.21 billion. Gross profit rose 42.9% to HK$6.31 billion and the gross margin reached 36.7%. This paper is filing it now, a month late, because the driver is in the Cantonese and Mandarin financial press rather than in the English pickups, which compressed the year to a profit-growth headline.
That driver is the mix. Sales of fixed-price jewellery, priced by the piece rather than by the gram, rose 50.5%. Sales of gold and platinum products priced by weight rose 22%. A weight-priced chain passes the metal cost to the customer and earns the retailer a labour charge on top; a fixed-price piece carries the margin inside the ticket. When gold is at a record and rising, the weight-priced case is where sticker shock lands and the fixed-price case is where the margin survives. Luk Fook's gross margin moved to 36.7% because the second grew more than twice as fast as the first.
§2The mix, not the metal.
This desk has been reporting the same company's quarters from the other side of the ledger. On 21 July we filed Luk Fook's June quarter with retail value up 32% and gold same-store sales up 50%; on 22 July, the split within it, gold up 50 and diamond same-store sales down 58% on the mainland. Put the annual mix figure next to those quarters and the shape is a jeweller that has rebuilt its economics around gold, and then, inside gold, around the pieces whose price is not a spot quote.
When gold is at a record and rising, the weight-priced case is where sticker shock lands and the fixed-price case is where the margin survives.
§3What the strategy costs.
The risk in the strategy is the same as the reward. Fixed-price merchandise protects margin as metal rises but caps the revenue upside when volume returns, and it requires design and brand strength that weight-selling does not, because the customer is being asked to pay for the piece rather than to audit the gram. It also has to be bought forward, which means the hedging desk carries the exposure the shop floor no longer does. Gold added another 1.99% on Wednesday alone.
This is the most transferable idea in Asian retail jewellery this year, and most of the English-speaking trade has not read it. Every independent watching gold pass $4,150 an ounce is facing the identical problem, that the metal now costs more than the customer's budget grew, and Luk Fook's answer is to sell fewer grams at a better margin rather than more grams at a worse one. The results are a month old and this is analysis rather than news. The arithmetic is current.
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