Laopu Gold revenue, profit growth beat on robust China demand

Co.’s revenue and profit growth topped estimates in the first half as the Chinese jeweller’s pieces, which blend traditional craftsmanship with rich cultural motifs, soar in popularity among middle class Chinese shoppers. 

Revenue increased 251% to 12.35 billion yuan ($1.72 billion) in the first six months of the year, according to a company earnings statement on Wednesday. Net income rose 286% to 2.27 billion yuan in the period. Laopu expected revenue and net profit to grow at least 241% and 279%, respectively, in a preliminary assessment in July.

Laopu’s rapid growth comes in sharp contrast to the struggles of some high-end Western retailers in China, defying a consumer pullback in an uncertain economy. Laopu, whose designs draw heavily on Chinese heritage, has been benefiting from Chinese consumers’ shift to domestic brands from imported status symbols. 

Gold’s resilience of as a store of value in a period of economic weakness has also fuelled the popularity of Laopu, which offers jewellery and ornaments in pure or diamond-studded gold. 

“Laopu is well positioned to take demand from western luxury jewellery brands’ entry-level customers and domestic gold jewellery brands’ high-end customers,” Citigroup said in a July research note.

The brand, which primarily operates in luxury shopping malls, has more than 40 stores across China. It opened its first outlet outside the country in Singapore in June, a test of demand from the overseas market.  

Laopu plans to raise prices from August 25, according to a company WeChat statement this month, without specifying the size of the increase. The jeweller usually raises retail prices every half year, and last did in February, according to Morgan Stanley.