Sa Sa targets Hongkongers as first-quarter sales fall by more than 56 per cent amid absence of mainland Chinese customers

17-Apr-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Beleaguered Hong Kong cosmetics retailer Sa Sa International will focus on Hongkongers’ needs after local customers emerged as the biggest source of revenue in its fourth quarter, which runs from January to March end.

“Local customers now account for most of the group’s revenue… [we] will continue to adjust its product mix to meet their demand for protective and pandemic-related products, and other beauty products,” Simon Kwok Siu-ming, the company’s chair and chief executive, said in an exchange filing after market close on Wednesday.

The company said its wholesale and retail sales had declined by 56.5 per cent to HK$892.4 million (US$115.1 million) in the three-month period. In Macau and Hong Kong, major markets for the company that accounted for more than 70 per cent of its turnover over the period, wholesale and retail sales declined by 62 per cent to HK$657.6 million.

The company attributed this plunge in sales to a decline in transactions by mainland Chinese tourists, which dived by 80.8 per cent. Its local customers increased by 4.1 per cent year-on-year, but its overall transaction volume decreased by 43.4 per cent for the three-month period.

Sa Sa, and Hong Kong’s retail sector generally, have been hit hard by a double whammy: first, the city’s anti-government protests; and then the Covid-19 outbreak. Last month, visitor arrivals to Hong Kong plunged by about 99 per cent to a record low of 82,000 from a year earlier, the Hong Kong Tourism Board said on Wednesday.

“In view of the persistent severe operating environment, the group will continue to carry out strategies for reducing costs, so as to maintain its competitiveness and reduce losses,” the company said in the filing. It will also continue to downsize its presence in Hong Kong and request short-term rental concessions from landlords where leases are yet to expire.

Its shares have retreated 27.3 per cent this year, underperforming a 14.3 per cent loss on the Hang Seng Index. It has closed nine stores across all markets excluding Singapore since October. In December, it closed all 22 stores in the Lion City. Short-term measures such as reducing salaries and unpaid leave have also been implemented. In February, Sa Sa asked its executive directors to take a pay cut of 75 per cent for three months to help reduce cost, after a slump in sales over the Lunar New Year holiday caused by the coronavirus outbreak.

Elsewhere, Fast Retailing, the operator of Uniqlo stores, also reported a 11.9 per cent drop in net profit last week for the six-month period ending February 29. It said 395 of its stores in China were temporarily closed in February, although its revenue had started to recover in March when a majority of these stores were reopened for business.


Category: Hong Kong

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