Beauty products retailer Sa Sa International has warned its half year profits will plunge by 50 per cent.
A Sa Sa profit warning filed with the Hong Kong Stock Exchange said preliminary analysis of accounts for the six months to September 30 pointed to a record decline in profit for the group.
It blamed “the worsening operating environment of the retail sector which has led to significant drops in both sales and gross profit and reduced operational efficiency as a result”.
In the second quarter, to September 30, Sa Sa has reported a 12.4 per cent fall in retail and wholesale turnover.
“Turnover in Hong Kong and Macau markets declined by 13.2 per cent, while same store sales decreased by 10.1 per cent. The number of transactions decreased by 5.7 per cent, while the average sales per transaction decreased by 7.9 per cent.
“The group’s retail and wholesale turnover in other markets (including Mainland China, Singapore, Malaysia, Taiwan and sasa.com) recorded a drop of 8.9 per cent during this period.”
Sa Sa said overall consumer sentiment and Mainland Chinese arrivals “continued to be adversely affected by a number of factors with no significant signs of improvement”.
“The strength of the Hong Kong dollar and the weaker yuan adversely affected the attractiveness of shopping in Hong Kong for both local consumers and Mainland Chinese visitors. Furthermore, the impact of “one-trip-per-week” policy has gradually gained momentum, leading to a decline of 13.1 per cent and 10.1 per cent in the group’s retail sales and same store sales in Hong Kong and Macau markets during the second quarter respectively.
“The number of transactions of Mainland Chinese customers decreased by 4.1 per cent, while their average sales per transaction decreased by 12.5 per cent on a year-on-year basis, dragging down the overall performance.”
Sa Sa says it will work on optimising product offerings and enhancing its customers’ shopping experiences to strengthen its position.
The company says it will release final results for the half before November 30.
