All 22 SaSa Singapore stores are to be closed down as the Hong Kong-headquartered parent calls an end to six years of ongoing losses in the city.
The move will see 170 jobs axed and has triggered a series of negotiations with property owners over lease-exit penalties.
In a statement filed with the stock exchange, chairman and CEO Simon Kwok said the company wants to concentrate its resources on the Hong Kong, Macau, Mainland China and Malaysia markets, as well as its e-commerce business.
“The local management team in Singapore will commence negotiations with the respective landlords of the Singapore stores promptly with a view to closing the stores as early as possible, but the exact timing for the closing of each individual store is subject to negotiations with individual landlords,” Kwok said.
The decision follows six consecutive years of losses by the SaSa Singapore business. In the six months to September 30, turnover fell by 4.6 per cent year on year to HK$99.4 million and represented just 2.8 per cent of the group’s total revenue.
In recent years, SaSa Singapore local management has been restructured, store displays enhanced and product mixes revamped in an attempt to improve sales. “Regrettably, the results were far from satisfactory,” said Kwok.
While the ongoing protests in Sa Sa International’s home market had no direct effect on the Sa Sa Singapore business, they influenced this week’s decision: Singapore is proving an unnecessary distraction when management needs to focus on maintaining sales and profitability in its core home market.
“The operating environment … in Hong Kong has become extremely difficult due to a drastic decline in mainland tourist arrivals,” said Kwok. “In view of this unprecedented challenge, the group’s primary goal is to focus resources on its core markets and businesses with growth potential, in order to restore profitability promptly.
“After careful consideration, the group believes that the closure of its business in Singapore will help improve the performance and profitability of its remaining businesses, and is in the best interests of the group and the shareholders as a whole.”
Kwok said Malaysia offered Sa Sa International greater sales and profitability opportunities and the team that currently manages both the Singapore and Malaysia markets will now concentrate resources on developing Malaysia.
“In the meantime, the group will expedite the store expansion in the mainland as well as the development of e-commerce business, so as to capture the lost traffic and sales in Hong Kong.
“In addition, the group strives to integrate its online and offline businesses for providing better customer experiences and laying a solid foundation for the development of new retail model in the future.”
He said the termination of SaSa Singapore store leases is not expected to have any significant impact on the operations of the group, as they account for a small percentage of the group’s 265-strong network.