Luk Fook Holdings (International) (0590) H1 2026 earnings summary

Executive summary

• Revenue increased 25.6% year-over-year to HK$6.84 billion, driven by strong fixed-price jewelry sales and product differentiation strategies.

• Operating profit rose 45.4% to HK$780 million, with profit attributable to equity holders up 42.5% to HK$619 million and net profit up 44.1% to HK$601 million.

• Basic EPS increased 41.9% to HK$1.05; interim dividend declared at HK$0.55 per share, payout ratio 52%.

• Global shop count decreased by 174 to 3,113, mainly in Mainland China, but overseas expansion continued, including entry into Vietnam and a net addition of 8 overseas shops.

• Same store sales in all markets recorded double-digit growth from October to November 2025.

Financial highlights

• Gross margin reached a record 34.7%, up 2.0 percentage points year-over-year; operating margin rose 1.6 p.p. to 11.4%.

• Gross profit increased by 33.2% to HK$2.37 billion; EBITDA grew 29.9% to HK$1,087 million, adjusted EBITDA up 38.4% to HK$880 million.

• Net margin increased by 1.1 p.p. to 8.8%.

• Inventory balance grew to HK$12.27 billion, with turnover days at 490; cash and bank balances fell 42.2% to HK$1,117 million.

• Net borrowings increased to HK$1.19 billion, with debt-to-equity ratio at 37.0%.

Outlook and guidance

• Double-digit simple sales and SSS growth expected to continue in all markets, with Mainland showing marked improvement.

• Gross margin in the second half likely to remain at record highs due to VAT policy changes and inventory cost advantages.

• Net reduction of around 200 shops in Mainland China expected for the full year, with fewer closures in the second half.

• Strategic focus on overseas expansion, market-oriented products, and operational efficiency; plan to enter at least three new countries and add 50 overseas shops over three years.

• FY2026 network expansion targets a net addition of 20 shops, mainly licensed, with a CAPEX budget of HK$100 million.