Chow Tai Fook, Luk Fook hint of possible profit decrease by at least 40% y/y

They issued profit warnings recently.

Jewellers Chow Tai Fook and Luk Fook both issued profit warnings recently, with the former expecting profit to be down by 40-50% y/y in April-September 2015 and the latter expecting profit to be down by about 40% y/y in the same period.

According to a research note from Barclays, both companies cited a decline in revenue and a decline in gross margin due to change in product mix as the reason of the profit decline.

Separately, Burberry also announced it has reached an agreement with Pacific Place’s landlord Swire Properties that it would be cutting one floor of shop space in the mall. This represents a 50% cut in area.

Burberry stated that it had negotiated with several landlords about rent reduction and some of them had yielded success. It further added that Burberry has 17 shops in Hong Kong now and sales remained challenging.