Sasa profits soared 34.7 per cent in the last financial year, as sales at Hong Kong and Macau stores posted solid gains.

Sasa’s parent Sa Sa International says group sales rose 6.2 per cent to HK$8.018 billion (US$1.022 billion), driven by a 7.9 per cent increase in Hong Kong and Macau, which accounts for 82 per cent of its business. Profit for the year was $440.1 million.

The increased profit and sales were achieved despite the closure of the Taiwan business, with all 25 stores closed by year end, March 31 resulting in a loss of $25.1 million.

Hong Kong and Macau

In its results announcement, Sa Sa International said the reasons for the recovery of Hong Kong sales were various. “The satisfactory economic environment, high employment rate, stable property and stock market, and bullish local consumer sentiment are all driving robust growth.”

The company said demand for middle- and high-end cosmetic products in Mainland China is soaring on the back of strong retail growth driven by the improved purchasing power of Mainland residents living in the third and fourth-tier cities.

“This, in combination with a weak US Dollar and the strengthening of the Renminbi, is encouraging outbound travel and greater consumption by mainland tourists.”

When those tourists visit Hong Kong, they typically shop at Sasa and its rivals. The growth rate of total transactions to Mainland Chinese visitors shopping at Sasa during the full year was 4.6 per cent, well ahead of the 3.3 per cent to local shoppers. But tourist transactions rose 8.5 per cent in the second-half year alone.

With same-store growth up 3.9 per cent, a review of locations clearly paid off. Sa Sa’s sales rose in every quarter, by 21 and 23 per cent in the first two and by 28 per cent in each of the last two.

Mainland China

Sa Sa International’s Mainland China sales, measured in local currency, increased by 5 per cent to $298.7 million.

Thanks to better cost control and increased store contributions, the group’s loss for this market reduced to $10.2 million. Group sales in the mainland rose by 6 per cent in the second half, compared to 3.9 per cent in the first half.

Singapore

Sa Sa Singapore sales rose 1.9 per cent for the year to HK$211.5 million, measured in local currency terms, but rose by 8.7 per cent on a same-stores basis.

Sales declined in the first quarter because of three store closures near the end of the previous financial year, however, same-store sales turned into positive territory in the second quarter, improving further in the second half.

Malaysia

Sa Sa Malaysia sales rose 6.1 per cent to HK$362.5 million, but same-store revenue declined 1.2 per cent.

The company said the more traditional brick-and-mortar retail market in Malaysia has been affected by the rapid development of digital media and e-commerce. “In addition, many new shopping malls have opened, diluting the traffic to the group’s existing stores, especially in the capital Kuala Lumpur, and indirectly affecting stores’ turnover.”

The group’s turnover growth declined from 9.2 per cent in the first half to 3.4 per cent in the second half.

Store network

At the end of March, Sasa had 265 retail outlets, including 118 in Hong Kong and Macau, 55 in Mainland China, 20 in Singapore and 72 in Malaysia. But within Hong Kong and the mainland, 22 stores were closed and 23 opened as the company moved to improve locations and reduce rents.