Percent. On the other hand, total operating expenses decreased by 15%. Its ratio to revenue therefore increased by 3.7 percentage points to 18.9%. In addition to the decline in diamond sales leading to a reduction in diamond purchases, which resulted in significant decrease of VAT refunds in relation to diamond imports in Mainland of about HKD 182 million. Together with gold hedging turned from a profit of HKD 8 million same period last year to loss of HKD 151 million this year contributed by the high gold price. Operating profit therefore substantially decreased by 37.6% to HKD 1.2 billion. Our operating margin remains at a double-digit level of 10.3%, while net margin decreased by 1.8 percentage points to 7.7%. Now let's turn to slide seven.
Targeting at reducing our inventory level to below HKD 8 billion, we have successfully decreased our inventory balance by 19.2% to HKD 7.5 billion by end of March 2022. However, with the faster decrease of revenue, average inventory turnover days grew by 128 days to 401 days, while if calculated by closing inventory instead of the average inventory, the inventory turnover days would increase by 65 days instead to 359 days. With the satisfactory drop in inventory level, the group went back to a net cash position with a balance of HKD 1.2 billion. Our ROE was 8.3%, which was 5.9 percentage points lower than that of the last year's level. For your information, since our IPO in 1997, there were only two years, including the year under review, with our ROE below double digits. The other year was the SARS year in 2003.
The group NAV per share as at end of March 2022 was HKD 17.73, which was 1.4% lower than last year. Now let's look at slide nine. During the year under review, despite the substantial drop in revenue benefited from the steadily increased gold price, the overall gross margin increased to 29.6%. Meanwhile, the operating margin in the past few years remains at quite a stable, low double-digit level. Let's look at slide 10 now. With the continuing impact of high gold price and the substantial decline in the number of visitors from Hong Kong due to the ongoing social activities and pandemic, Hong Kong and Macau revenue recorded significant decline of 36.4% to HKD 6.3 billion, which accounted for around 55.8% of the group's revenue. The segment profit decreased by 15.9% to HKD 387 million, which accounted for 29.8% of the group's total.
The segment profit margin was 6.2%, a drop of 3.6 percentage points. In the Mainland market, the revenue declined by 17.4% to HKD 5 billion, with segment profit declined at a relatively mild manner by 2.6% only to HKD 913 million because of a much lower drop of revenue than the Hong Kong and Macau market, the reversal of last year's provision of around HKD 26.8 million for impairment loss on trade receivables during the year under review for Mainland's retail business, and profit on Mainland licensing income staying flat. Therefore, Mainland's profit contribution substantially enlarged from last year's 49.3% to 70.2% this year. Retail business was our primary revenue source. Due to the poor macroeconomic condition, the group's retail revenue decreased significantly by 35.1% to HKD 7.8 billion, representing 69.8% of the group's revenue.
The segment profit decreased by 54.7% to HKD 426 million. It is accounting for about one third of the group's total. Despite the increasing number of licensed shops with a drop in the wholesaling of diamond throughout the Mainland, the group's wholesale business revenue fell by 12.9% over the corresponding period last year to HKD 2.6 billion, accounting for 23.1% of the group's revenue. The segment profit decreased by 23.7% to HKD 310 million, accounting for 23.8% of the total. The segment profit margin was 11.9%. On the other hand, despite the increase in licensing income in the first three quarters due to increase in number of licensed shops, with the impact of the pandemic on business in the fourth quarter, licensing income over the year stayed flat at about HKD 801 million, which was 7.1% of the group's revenue.
The segment profit increased by 1.8% to HKD 564 million, contributing to the largest share at 43.4% of the group's total. With the decreasing demand due to the strong gold price and the impact of poor macroeconomic conditions on consumer sentiment, gold and platinum products sales recorded a significant decline of 35.7% to HKD 5 billion, representing 48% of the overall sales. With a record high gross margin of 21.3%, a 5.7 percentage point increase in the year under review, the group's profit, therefore, only declined by 12.2% to HKD 1.1 billion for gold and platinum, and then representing 38% of the group's total. Sales in gem-set jewelry products fell by 25.3% to HKD 5.4 billion, accounting for 52% of overall sales.
Gross margin of gem-set jewelry products stayed flat at 31%, while its gross profit as a result decreased by 25.2% to HKD 1.4 billion, accounting for 61% of the overall gross profit. Now let's turn to slide 12. Consumption expenditure, particularly in Hong Kong and Macau markets, is weakening as a result of the high gold price and the substantial decline in the number of visitors due to the ongoing social activities and pandemic. Retail revenue from the Hong Kong and Macau markets decreased by 36.9% to HKD 6.1 billion, accounting for 97% of the market total. Because of the high fixed cost structure, its segment profit fell substantially by 67.3% to HKD 254 million, and its segment profit margin was 4.2%. Its wholesale business revenue fell by 26% to HKD 100 million.
Its segment profit decreased by 52% to HKD 63 million, accounting for 16% of the total, while its segment profit margin decreased to 63%. The segment profit of wholesale business included the profit of inter-segment sales to self-operated shops. If including inter-segment sales in the denominator, the segment profit margin was 3.6%, a 1.6 percentage point drop as compared to the 5.2% in last year. Apart from that, benefiting from the increase in designated supply consultancy services revenue as a result of the increase in number of licensed shops, Hong Kong licensing income increased by 24% to HKD 70 million. Its segment profit rose by 24% to HKD almost 70 million, with a segment profit margin of 99.6%.
In Mainland markets, with the high gold price as well as the continuing impact of the US-China trade war and COVID-19 pandemic on the macroeconomic conditions, retail revenue from the Mainland market declined by 27.9% to HKD 1.7 billion. However, as contributed by the reversal of last year's provision of around HKD 26.8 million for impairment loss on trade receivables during the year under review, segment profit increased by 4.8% to HKD 172 million. The segment profit margin was 9.9%. As the increase in the number of licensed shops in Mainland offset the impact of other negative factors, licensing income in the Mainland market fell by 2.6% only to HKD 731 million. Its segment profit fell by 0.7% to HKD 495 million. The segment profit margin was 67.6%. Let's go to slide 14 now.
During the year under review, in terms of retail business, the Hong Kong market recorded the most significant drop of 43.6% in revenue to HKD 4.27 billion, due to the reasons explained earlier. With high gold price, the sales of gold and platinum products recorded a drop of 38.7%, and 28.9% in Hong Kong, Macau, and Mainland markets, respectively, while gem-set products sales decreased by 34.2% and 25.7% in Hong Kong and Macau and Mainland markets, respectively. Let's go to slide 16 now. With strong gold price, the continuing impact of social incidents in Hong Kong, US-China trade war, and COVID-19 pandemic, our overall SSSG was negative 32%, with Hong Kong and Macau markets recording negative 33% and Mainland recording negative 20%. Due to the strong gold price, gold and platinum sales recorded a decline in revenue and quantity, with an increase in ASP in all markets.
On the other hand, ASP of overall gem-set products in both Hong Kong, Macau, and Mainland markets decreased, mainly because most gem-set sales have been shifted from diamond product sales to lower value items such as 18 karat gold and fixed price gold product sales. Slide 17 shows the same store sales growth figures of self-operated and licensed shops in different city tiers and regions in Mainland. Overall, licensed shops performed better than our self-operated shops, as licensed shops normally are located at better locations and have better gem-set sales mix in Mainland. During the year under review, the same store sales growth of licensed shops was negative 12%, while that for self-operated shops was negative 20%.
The same store sales growth of gold and platinum products was negative 22% and negative 16% for self-operated shops and licensed shops respectively, while the gem-set same store sales of licensed shops recorded a single-digit drop of 5%, and self-operated shops was a 17% drop. Now let's go to slide 18. During the year under review, the SSG in Hong Kong Macau market declined significantly as a result of strong gold price, the continuing impact of social incidents in Hong Kong, US-China trade war, and COVID-19 pandemic. The SSG in the Mainland dropped at a milder magnitude. For April to May 2020, SSG in Hong Kong Macau markets still record a drop of around 80%, just like its performance in February and March 2020 because the Hong Kong, Macau, and Mainland normal cross-border visits were not yet resumed.
As for Mainland markets, overall speaking, actually, the same store sales for all the shops altogether was talking about 40% drop in March 2020 and around 20% drop in April to May. Starting from June 2020, actually in the first three weeks of June, Mainland markets recorded progressive improvement and a decline of same store sales for overall shops by less than 20%. Indeed, it is quite a good improvement. For Hong Kong Macau markets, retail sentiment gradually recovered as well, and the decline of same store sales in the first three weeks of June actually narrowed to around 60%, against the 80% of the previous few months. Let us go to slide 20 now.
We have total operating expenses of HKD 2.1 billion, representing increase of 15% from last year's level, with revenue declining faster, its ratio to revenue has increased by 3.7 percentage points to 18.9% with the adoption of the new accounting standard. Part of the rental expense was classified into financial cost at an amount of HKD 28 million from lease liability and depreciation of right-of-use asset at an amount of HKD 474 million, which was included in depreciation and amortization. If we include above two expenses into fixed rental for comparison, the total rental would be HKD 685 million, representing a reduction of 12.8%, and to revenue ratio at 6.1% as compared to the 5.5% in last year. The total operating expenses to revenue ratio will increase to 19.1%.
There were 22 shops in Hong Kong, Macau subjected to rental renewal in FY 2020, accounting for around 1% of total number of shops. The full-year rental reduction on renewal was 7.5% for the year under review. Apart from the reduction on renewals, we have around HKD 24 million rent concession from landlords in relation to the social activities in Hong Kong and the pandemic. Given the current situation in Hong Kong, we have actively negotiated for rental reductions for our renewals and short-term rental discounts. There will be 17 shops subject to renewal in FY 2021, accounting for about 30% of the total. We expect a double-digit drop on these renewals. Slide 21 shows our inventory information. With our key target in reducing inventory level to below HKD 8 billion, we have successfully reduced the inventory level by 19% to HKD 7.5 billion.
Inventory for gold and platinum decreased by 32.7% to HKD 2.7 billion, while that for gem-set jewelry decreased by 20% to HKD 4.8 billion. Our faster downturn in sales in the year under review, the average inventory turnover days grew by 128 days to 401 days, while closing inventory turnover days grew by 65 days to 359 days. In FY 2020, the group incurred CapEx of HKD 392 million, in which HKD 282 million was used for acquisition of offices and showrooms in Xi'an and Shenzhen respectively. Let us look at slide 23 now. During the year under review, the impairment provision on amounts due from HKRH, Hong Kong Resources, of HKD 7 million, arising from investments and operating activities between HKRH and its subsidiaries widened to HKD 38 million.
Now let's look at the group's future plans and strategies. Prior to the year under review, the group has set up its new three-year corporate strategy with supply chain management, Mainland market expansion, and strategic growth as its three main focuses so as to foster its future business growth. In order to further enhance the group's competitive edge, the group will focus on strengthening supply chain management through various means. We will try our best endeavor to identify right products, set right price, and allocate products to the market at right timing by implementing high level of optimization and big data management, improving factory productivity, shortening inventory turnover period, establishing strategic partnership with suppliers, streamlining logistic and distribution, and intensifying support to franchisees. Hoping all this will help to promote our business development and strengthen our operational efficiency and effectiveness. Let's look at slide 27 now.
The group has already adopted multi-brand strategy, and we will strive to develop more new brands in the future. During the year under review, we have opened three Dear Q and 32 Goldstyle independent shops in Mainland. We target to open around 50 Goldstyle shops and aim to develop more new brands in the coming year. Slide 28 shows our new brand, Luk Fook Joaillerie. This brand targets at the high-end jewelry sector and features exclusive design and craftsmanship, including our renowned jewelry masterpieces. The first shop-in-shop will be opened in Macau next month, and we target to open three stores in the coming year. Slide 29 shows our expansion plan in FY 2021. As at 19 June, 2020, including the independent brands, Dear Q and Goldstyle, we have 2,117 shops worldwide.
With the focus of Mainland market expansion in mind, we will continue to seize opportunities to enlarge our flag coverage in Mainland. Expansion will be mainly focused on adding licensed shops in fourth and fifth-tier cities. In order to improve our operational efficiency, we'll transfer around 35 self-operated shops, which are mostly jewelry shops, to licensed shops in the coming year. Nevertheless, we target to net increase not less than 150 Luk Fook shops and net add at least 50 shops of new brands. We will also continue to further develop our e-commerce business and target to grow revenue by 15% in FY 2021.
As it is expected to take some time for Mainland tourists to come back to Hong Kong and for retail atmosphere to resume to normal, the group will net reduce five shops in Hong Kong in the coming year and seek opportunities for opening two new shops in the Macau market. The CapEx budget for FY 2021 would be around HKD 100 million, which will be used for shop renovation, management plans and office renovation and purchase of equipment. Now let's go to slide 30 about the e-commerce business. In FY 2020, the e-commerce revenue increased by 13.8% in Hong Kong dollar and 18% in Renminbi. The revenue accounted for 36% of the group's revenue in Mainland, with a gradual growth in ASP to hold CNY 1,300. It's also accounting for 8% of the group's retail revenue as compared to the 4.6% last year.
We currently have 14 platforms, including Tmall.com, JD.com, and VIP.com. We took the initiative to offer video chat, broadcast customer support, and quality assurance certificate to platforms to enhance the customer experience in terms of profitability. We will continue to promote Goldstyle, accessible luxury jewelry products to expand our footprint in the younger consumer markets. Let's turn to slide 31 now. The group also continued to capture the rapid growth of online marketing by various creative means. We made use of trendy social media platforms, including RED, Douyin, and online fashion magazines to increase our brand exposure, expand our footprint in the young consumer markets. Expanded online sales channels by live streaming by staff and KOLs, and enhance CRM via instant messaging apps to reach and engage with customers. We are now on slide 32.
For the anniversary promotions this year, apart from establishing the 91 Golden Senses Land pop-up store where passersby played gold-digging games and met KOLs at booth. We also held our on-theme Gong Xi challenge on RED, Xiaohongshu, which recorded a total of over 11 million page views, which once again raised Luk Fook's brand awareness among young consumers. Let's go to slide 33. To celebrate the remarkable milestone of reaching 2,000 shops worldwide, we invited renowned celebrity, Li Yifeng, as our global brand spokesman. We held a kick-off ceremony in Beijing to unveil the fan-style pop-up store in several major cities. Number of followers of official Weibo page increased from 600,000 to over 1 million after the announcement of the new spokesman. We were ranked number one in the impact of jewelry and watches brand spokespersons in AIMAN China Entertainment Index.
On slide 34, you can see that we were invited to be one of the 10 brands participating in the popular Five Fortunes Collection challenge hosted by Alibaba in last Chinese New Year. We have reached over 443 million participants and achieved brand exposure of 220 million. To conclude with the continuing uncertainties on macroeconomic environment arising from the social unrest in Hong Kong, U.S.-China trade war and COVID-19 pandemic. It is hard to set a target for the group's performance, though we really want to see some improvement in the coming year. Although we expect to see tough market condition in short term, we are still optimistic in mid to long-term prospects and we are focused on expansion in Mainland markets, relying on the solid growth potential of the middle-class population.
The group looks forward to regaining growth and bring the group's business to a new height in the near future. This is the end of my presentation, and thank you for listening.
Thank you, Kathy. Moderator, please open the floor for questions now.
Thank you. Now we will begin our Q&A session. If you have a question for our speaker, please dial zero, one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask your question. If you find your question is answered before it is your turn to speak, you can dial zero, two to cancel your question. If you are using speaker equipment today, please mute the handset before making a selection. If you have a question for our speaker, please dial zero, one on your telephone keypad now to enter the queue. Our first question is from Joey Chang from ICBC International. You may begin the question.
Thank you. Thank you, Kathy. I have two questions. First is, can you illustrate the SSSG in April, May, June to date of Mainland self-operate stores, Mainland licensed stores, and HK and Macau stores respectively? The second question is, can you release some plans of stores rental renew schedule in Hong Kong and rental cut schedule? Thank you.
Okay. Actually, for April, May, and June, in Hong Kong, Macau market, there is not. Except June. Actually, June show much progress for Hong Kong market, especially. Basically for April and May, Hong Kong market, we are talking about 70% something or something like 70% something drop in same sales. For Macau market is actually, because Macau market relies very much on the Mainland businesses for its business. So basically because the border is not yet open, so basically for Macau market, it is always talking about 90% drop of same sales since March up to now. For June, it is a bit better. It is now something like maybe 80% something . For Hong Kong market, actually since June, it is talking about lower drop than the Macau market. So it is something like maybe 60% or 70%.
Now in June, the first three weeks, it is talking about 50%, so it is a much improvement, against the previous two months. For Mainland markets, for their overall figure, we have talked about that already. Actually, they have been keeping at quite a stable manner of around 20% overall in the past few months. In June it is a little bit less than 20%, that is mainly for the license shops. For the self-operate shops, it is actually something like, 80% in March. Something like maybe 60% in April and May. In June it is similar, something like that.
Thank you. Very clear. What about the rental cut?
For the rental part, actually, we mentioned that because we do not expect the Hong Kong market to swing to normal in the short term, in the short period of time. Even after the pandemic, we expect the Hong Kong market to be weak. That is why we plan to close about five shops in Hong Kong, especially in those tourist area in the coming year. For Macau, because actually before the pandemic, the Mainland visitors transactions actually grew to 70% or more. Basically we expect the Macau market to do well after the borders are reopened. Basically that is the reason why we expect to open two more shops in Macau market.
Okay.
For Mainland markets, we would still focus on expansion in Mainland markets because we expect the middle class population growth will be good. Basically, we would open a net of 150 shops in Mainland. Luk Fook brand, mainly license shops format. We would open at least 50 shops for the new brand, but it will be mostly Goldstyle.
Thank you. So basically for Hong Kong shops, besides the five shops which are going to be closed, there are no additional renewal of contract, right?
We have 17 shops subject to renew in Hong Kong, and we expect that to be something like double digit drop. It is talking about 30% of the portfolio.
Okay, thanks. Thanks. Very clear.
Thank you. There are currently no questions in the queue. If you have a question for our speaker, please dial zero, one on your telephone keypad now to enter the queue. Our next question is from Marvin Hui from DBS. You may begin the question.
Hi, Kathy. Hi, Nancy. Thanks for taking my questions.
Hi.
First, I have to check with you in terms of the first quarter FY 2021 performance, April to June. In terms of versus gem sets, could you tell us a little bit more how each division has been performing? Also, in terms of the average selling prices for these two divisions, how is the trend like? Lastly, in terms of e-commerce performance for April to June, what have we been seeing in terms of the growth momentum? Thank you.
In fact, for gold and platinum in April to June, actually, by product in percentage will figure. For gold, because of the high gold price, we see very high drops, and then basically everywhere. Actually, we still talk about, let me see, 70% or 80% drop, something like that, for the sales operation. Both of them are actually dropping at quite similar magnitude.
Right. In terms of ASP, how is it then?
Now for ASP, actually, if we talk about gold product, because of the rising gold prices, actually increasing for gold sales. But for gem-set category, because we have got higher proportion of 18 karat gold and fixed price gold products instead of diamond products, so basically we have a little bit of drop. Of course, the diamond products actually seems to be a bit better now. They are selling at a better manner than before, but still the ASP is still low in the last 2 months.
In fact, how much is the fixed price gold product taking up in the latest report period versus also the April to June numbers?
Yeah. Actually, we are going to announce our first few details in mid-July. Basically, I guess maybe we will talk about the details after we have announced our performance for the first quarter in mid-July.
Certainly. I also have some questions about the latest employee support scheme. I just want to check what are our expectations for the government subsidy in this scheme that we could collect in the six-month period. Also, in terms of rental relief, probably some temporary rental relief have been given from the landlords. For April to June, for examples, what are our expectations in terms of rental relief?
In fact, for the support scheme from the government, actually, for the staff, we have received the first cut already. We are talking about HKD 30 million something . We expect all together to be something like HKD 70 million for the six months for the staff salary. Then for the rental relief, actually we got something like HKD 24 million recorded in the financial year 2020. There will be maybe another something like a bit less than HKD 20 million for the new financial year.
Right. Thank you very much, Kathy. Thanks.
Thank you. If you have a question for our speakers, please dial zero, one on your telephone keypad now to enter the queue. Our next question is from Lena Yi from HSBC. You may begin the question.
Hi, Kathy. Thanks for your presentation. I just want to clarify. You mentioned you want to close five stores in Hong Kong. Are those five stores included in the 17 renewals in FY 2020?
Should be.
Oh, okay. Got it. Okay. I want to maybe ask a more medium-term question. What is the, this year its visibility is quite low, but what would be the optimal network size in Hong Kong, Macau in two to three years' time? By then, what would be the normalized OP margin or rental to sales cost ratio in Hong Kong and Macau? Thank you.
Actually, for the optimum size in Hong Kong and Macau, it's hard to tell really. Basically, we always adjust our shops according to the latest situation in the market. In the past years, even though when there was very kind of a booming situation, we did not really open shops in a very aggressive manner. We are very conscious about the control on ourselves to open shops or to expand shops in a disciplined manner. That's why during the downturn period, we did not really need to reduce too many number of shops. This time, it's a bit serious. In the past, we've been keeping quite stable number of shops for Hong Kong Macau market for quite some years already.
But then, in lieu of the serious impact of this pandemic, actually, we don't expect the economy to go back to normal or as it was before in the near term. That's the reason why we decided to reduce about five shops in Hong Kong. At this moment, we don't have really any concrete plan to further reduce the number of shops in Hong Kong. Basically, if you really want to ask for an optimal size, then that would be the optimal size.
What is the normalized OP margin you will be looking for in two to three years' time?
In fact, when you look at the OP margin, it has been stable at a kind of a low double-digit level for quite some years already. We still expect OP margin to maintain at double-digit level in the coming years.
Okay, thank you. I have a last question. Can you share with us what is the inventory of your licensing shops in China compared with the normal level or any other indicator? Thank you. That is all my questions.
Well, in fact, because they stock up for the Chinese New Year, immediately before January, that is why they are still consuming the then inventory, excessive inventory because of the pandemic. They are just like us, having a bit of excessive inventory at the moment. We see that they have already started kind of a replenishment already. Basically, it indicates that their inventory level is going back to normal now. In fact, we know that some of the licensees are doing quite well, actually. Although we have got something like maybe a 20% in same-store sales drop overall for the licensees, licensed shops in the past few months. In fact, for some of the licensees, they may go back to something like more than 90% or even having a little bit of growth. They are doing quite well.
Got it. Can you quantify what is the destocking factor by licensees in first half FY 2021?
Destocking factor?
Yeah. For example, like your retail sell-through for the licensing shops could be like 100, right? What would be like the wholesale to their retail sell-through? What would be the impact from the inventory destocking?
Actually, because of the destocking, of course, they would replenish lower. That's actually in the past few months, because they've got excessive inventory because of the pandemic since Chinese New Year. You have to quantify that, really. Actually, some of them have already started their replenishment.
Okay, got it. Thank you.
Thank you. Next question from Tiffany Fong from CBRE Group. You may begin the question.
Hi, Kathy. I have two questions. The first one is regarding your self-operated stores. I am wondering why the performance is so weak. I understood the performance is normally weaker than licensee stores, but is there any particular reason for the even bigger decline at Hong Kong stores? Do you plan to close them?
No. In fact, most of our several shops, we have got a lot of self-operated shops in central part of China and then especially in Wuhan. That would tell why it is performing so weak against the licensed shops.
Oh, okay. For the around 200 stores, most of them are in Wuhan, right?
Yeah. Quite many of them are in Wuhan, in central part of China, a nd some in Beijing, too.
Oh, okay. Got it. My second question is regarding the Goldstyle. I want to know the current revenue contribution and the GP margin level.
Well, in fact, most of them are actually licensed shops, so it's not affecting our revenue.
Oh, okay. Does the store net addition target of 150 include the 50 Goldstyle stores?
No. It's mainly for local shops.
Okay. These are separate, 150 for local shops and 50 for Goldstyle.
Yes.
Okay. Thank you. That is all, no question.
Thank you. Moving on, we have Paolo from Maple-Brown Abbott. You may begin your question.
Thank you. Hi. Thank you for your presentation, Kathy. I have got two questions here. The first one is very quickly, just want to confirm the royalty fee from the licensed shops. Is it charged per annum or per product?
Well, it is actually charged on the cost of purchase every time when they replenish.
From the cost of purchase. Yep. Okay. Thank you.
Yes.
The second question is, do you have any comment on the competition that is coming from Chow Tai Fook? They have been very aggressive in opening franchise stores in the lower tier cities. I think they opened about 400 to 450 a year. Can you comment on the competition out there?
Yes, they have opened a lot of new shops in the last financial year. That is why we are actually speeding up the opening in China as well, so that last year, we opened a lot, and in coming years, we are also trying to open more shops in the lower tier cities. We have a new program to attract the licensees to open more shops in these lower tier cities.
Has that been a great competition to Luk Fook?
You know what, because in the past several months, we have been very distorted in a lot of ways. But so far, you see that our numbers are not that bad compared to other competitors in the market. So I think we are still doing okay, so that in the coming months, in the financial year, actually, going to put more effort in expanding more aggressively in the China market, especially in the lower tier cities.
Yeah. So I guess going forward, if they open around 400 a year and you only open 150, there is going to be a lot of challenge for Luk Fook, I guess. Do you have any plans to compete with them already?
No, not really, because you know what? We have around 400 licensees in the past for quite a long time. And so we now have more than 500. We have 506 licensees right now. And we added 83 licensees in the last financial year actually, so that we have been more aggressive in terms of the shop opening and recruiting licensees. And these licensees, actually, we are on a very different model. So even though they are using license model as well, but we are quite different in terms of the, for example, the royalty income or the fee schedule and also the mindset, because for our licensees, they have been more like an active entrepreneur. They have to manage the shop and then run the operations. And, as long as they are putting more effort, they will earn more.
But for a lot of the licensees in the past, for Chow Tai Fook, they have been more like a passive investor. So that is why for the 50 licensees that we have, they are more like an entrepreneur, so that we are kind of attracting different types of licensees.
Okay. Thank you.
Thank you.
Thank you. Next question, we have Mun Han Ong from Tokio Marine Asset Management. You may begin your question.
Hi. Hi management. Hi, Kathy. Thanks for hosting. I am just curious, out of your 200 stores in China right now, I am just curious because the macro is still weak. There is still trade war looming. What gives the confidence for the licensee to open 200 stores? Because historically, that is your run rate, around 200 stores. So what gives them the confidence to continue to grow at this pace? Yeah.
Well, in fact, actually, just mentioned, the licensed shops are recovering quite well, and some of them are even having a kind of growth. Some of them may be having a kind of similar level of last year's performance, even under the pandemic. Basically, because we have targets that are opening licensed shops in 50 cities, and they are not as crowded as the large cities. Basically, all the high-tier cities. Maybe the pandemic situation in those cities are not as bad as those high-tier cities. That is why you can still see many licensees having interest in expanding in a fast manner in the lower tier cities in the coming years.
Right. That means in terms of the store expansion, would be or do the even lower tier, like 4 to 5 tier cities for this year?
Yes.
Right. At the same time, just curious, out of your 500 licensees, any of them went under distress? They have cash flow problem, they have to close down any stores, any such problems? Just clear on that point.
In fact, actually, when you look at the latest shop number, we got a little bit less, three shops less than before. Than March end position. Mainly because some of the licensing shops have been closed because of some problems. Basically, there are some, but only a few. Most of them, because for the gold price rise in the past period of time is continuing yearly rising. Basically, even if they really have a cash flow problem, some of them, they really sell their gold on hand actually to catch the gold to help their cash flow problem. That is why, in fact, it is not really that serious for our industry in the pandemic period of time, because the inventory we hold on hand is really valuable and at a rising price, and that is why the cash flow problem is easier to solve than the other industry.
Okay, great. That is a very interesting insight. Thanks a lot. Thank you.
Welcome.
Thank you. Next, we have Charmaine Yap from Redburn. You may begin your question.
Hi there. Thank you. I have two quick questions, please. The first one on price for the gem-set jewelry. Have you done any increases recently or are there any plans to do so? Not the gold one, but the gem-set jewelry part. The second question is on demographics of the Mainland Chinese consumer. Have you seen any changes in recent months in terms of maybe the age group or anything that you can share on who is driving most of the recovery at the moment?
The diamond price has been quite stable. I don't think we have changes that by a lot. In recent times, of course, the gold sales have been lower because of the high gold price, so that people actually shift to 18 karat gold items and also the lower lighter gold items and these stuff. Also, for example, on e-commerce, they're selling very well on the pearl items as well, the very low-value items. I guess that is because the people, in the past several months, the economic environment hasn't been that well, but they have a lot of time to shop online, or they have a lot of time to chat with the salesperson. We have been very aggressive on WeChat and talk to the customer, show them the product as well. They are willing to buy lower-value items for daily wear.
Thank you. That's interesting cost impact. In terms of age group, have you seen any changes recently?
Well, to be honest, I don't have any statistics on the age group. We can see that these people, they purchase online. Also the live streaming KOL has been very popular. These people are actually relatively lower, but I'm not saying that it's lower, like in the teens or so, but they are actually, let's say, below 40. These people, they always go online and then check out what new hot things there are. Also the chat culture and salespeople over at WeChat, and then we send them photos. Even our salespeople, they do a lot of live streaming session as well. No matter if on our own or with a partner with the department stores, we have been very aggressive on these kind of social media platforms.
Okay, thank you.
You are welcome.
Thank you. Next, we have Hugo from Kingsway Group. You may begin your question.
Hi. Management, thank you for taking my question. Just a quick question on the holding gain on gold actual value. The same number for FY 2019 was HKD 177 million loss. Can I have the same number for FY 2020?
It is HKD 115 million gain.
Okay, got it.
Yes.
HKD 115 million. Thank you.
Thank you.
Thank you. As there are no further questions, I will hand the session over to you, Chloe. Please go ahead.
Thank you, Kathy and Nancy, and thank you very much for joining the call, everyone. Have a nice evening. Bye.
Bye-bye. Thank you. Bye-bye.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.