Sa Sa International has reported a massive 76.9-per-cent slump in Hong Kong and Macau sales during Lunar New Year as the coronavirus kept mainland Chinese tourists at home.
As a result the company has shut 21 stores and will “substantially strengthen control measures” in order to reduce losses.
Besides the store closures, its executive directors have taken a 75-per-cent salary reduction for three months as the first in a series of cost-cutting initiatives. Inventory levels will be cut and the company is looking to reduce staff costs.
With Hong Kong Immigration Department figures showing an 85.5-per-cent year-on-year decrease in mainland tourist arrivals, the impact on retailers across categories generally frequented by visitors, such as luxury goods and cosmetics, is expected to be severe for many retailers in the territory.
Sa Sa International chairman Simon Kwok said that in Hong Kong, the company’s retail sales plummeted by 77.9 per cent year on year.
“Such decline was mainly attributable to the novel coronavirus outbreak, resulting in further decline of mainland tourist arrivals and poor local consumer sentiment.”
Falling store footfall saw a drop of 54.4 per cent in the total transaction volume, with spending by mainland tourists down by 92.1 per cent and that of local customers by 8 per cent. The average sale per transaction among local customers fell by 25.6 per cent.
Kwok said Sa Sa International’s retail sales in Macau plunged by 73.4 per cent, with an almost 70 per cent drop in total transaction volume. Mainland tourist spending fell by 76.5 per cent and spending by locals by 29.4 per cent.
Kwok said that with efforts to contain the coronavirus seriously affecting mobility of mainlanders,
Sa Sa International will “closely review the market condition and adjust its product strategies”. “Facing the severe shortage of masks and disinfection products, the group strives to support Hong Kong and Macau SARs citizens to combat the coronavirus outbreak by going all out sourcing such products globally and selling them at reasonable prices to cater for their needs.”