King Fook sees profits soar despite pandemic and marketing cuts

The results of the King Fook jewellery group for the year that ended 31 March 2021 saw a total revenue of HK$640.6 million, representing an increase of HK$24.9 million or 4.0% from HK$615.7 million last year.

The Group achieved a consolidated profit of HK$28.6 million, which represents an increase of 401.8% as compared to HK$5.7 million last year.  The significant increase in profit was primarily due to the increase in revenue, improved gross profit margin of products and decrease in operating costs.

The group’s distribution and selling costs for the year decreased by 14.3% to HK$105.2 million as compared to HK$122.8 million for the previous year.

Among the costs, the significant reduction of rental expenditures and marketing expenses was a result of easing of the rental market that worked in the brand’s favour, and cancellation of larger scale customer events under the impact of COVID-19.

Despite the pandemic, the group managed to increase the revenue of its retailing business by 4.3% to HK$639.6 million from HK$613.2 million for the previous year. This was due to the expansion of its store network, strong performance achieved by sales of gold and jewellery products and recovery of watch supply in the second half of the Year.

While its store network used to be concentrated in Central and Admiralty areas, in order to extend its services to other areas in Hong Kong, the group decided to open up a Harbour City store in Tsimshatsui, Kowloon in November 2019, another new store selling gold and jewellery products was opened in New Town Plaza in Shatin, New Territories in February 2021. These new stores contributed 39.5% of the sales increase for the year.

Moreover, it also established online shopping platform for our customers starting from April 2020 and it contributed another 11.5% of the sales increase for the year. As at 31 March 2021, the Group had seven shops in Hong Kong for retail of gold ornaments, jewellery, watches and gifts and bullion trading.

“We have been working on strengthening our jewellery business and have applied various measures to capture more sales,” it said in its financials.

These measures include opening new jewellery stores, offering bespoke jewellery design services to customers, utilising customer data base to improve retention of VIP customers and tailor-made training programs to improve sales staff’s sales and service skills.

Sales of its new stores accounted for 15.3% of the total jewellery sales for the Year and its jewellery sales achieved an increase of 21.0% as compared to last year.

For its gold business, the high gold price adversely affected the sales of gold products but we managed to increase sales of gold bullion and attracted more corporate orders. As a result, its gold business achieved a year on year increase of 25.1%.

At the beginning of the Coronavirus outbreak, its watch business was significantly affected since the production of most watch brands was disrupted, leading to a very limited watch supply in the market. However, watch supply recovered in the second half of the year, which boosted its watch business for the year to achieve sales level similar to that of last year.

Moving forward, the brand expects that crowd control measures might continue to delay wedding plans, and the border controls will keep tourism business at almost zero. Moreover, the China-US conflict will continue to affect the recovery of the world’s economy. However, with the global awareness on the importance of vaccination, there might be a chance of recovery towards the end of the year if vaccination rate could reach a high level in most key countries, it said.

“Our group will stay prudent but keep looking for opportunities and take steps to further develop our business. These include expanding our store network in key locations, investing in our people, utilising customer relationship management tools to enhance shopping experience, developing omni-channel retailing to serve our customers online and offline seamlessly, offering bespoke design services and high quality products to our customers and striving to improve our operational efficiency,” it added.

Related articles:
Asian buyers to help return sparkle to fine jewellery and watch market crippled by COVID-19 

Jewellery brand Carrie K. taps on morse code to elevate product personalisation