Sa Sa International sales plunge as coronavirus bites
Fourth-quarter sales of beauty-products retailer Sa Sa International plummeted 62 per cent in Hong Kong and Macau as the coronavirus pandemic brought to a halt inbound tourism from Mainland China.
Sales to mainlanders in Hong Kong and Macau slumped by 80.8 per cent. While local customers spent 4.1 per cent more during the quarter, the average sale per transaction dropped 20 per cent and their overall basket size dropped by 34.6 per cent.
“The rapid outbreak of novel coronavirus around the world has wreaked havoc on the global
economy, and the group has been inevitably affected,” said Sa Sa International chairman and CEO Simon Kwok in a quarterly trading update to the Hong Kong stock exchange.
Group turnover fell 56.5 per cent in the three months to March 31, including the permanent closure of its Singapore business
Strict border controls imposed in Hong Kong to reduce the spread of the virus, the two-week closure of Macau casinos and decreased consumer demand led to the temporary closure of many SaSa stores, with other stores trading shorter hours. Kwok said that while the closures lowered operating costs, they also contributed to the sales decline.
“In view of the persistent severe operating environment, the group will continue to implement strategies for reducing costs so as to maintain its competitiveness and reduce losses,” said Kwok. “The group will also do its best to protect the livelihood of its staff.”
Sa Sa International will continue to trim its store network in Hong Kong as leases come up for renewal and the company will continue to pursue rent relief from landlords.
“Furthermore, the group reduced non-essential and non-productive expenses substantially across all departments, streamlined its organisation structure and implemented short-term measures such as reducing salaries and adopting the scheme of unpaid leave to reduce operating costs,” he said.
With local consumers now accounting for a majority of the group’s overall sales, the company plans to adjust its product mix to meet their demand for protective and pandemic-related
products and other beauty items. Slow-selling lines will be dropped and inventory reduced to help preserve cash and reduce the risk of stored products expiring.
Kwok said that the company has progressively been reducing inventory levels and has adequate cash to meet its current business needs, despite the decline in sales.
Enforced store closure in China during the quarter saw sales there fall by 51 per cent and in Malaysia, where non-essential stores have been ordered closed for six weeks commencing mid March, sales were down by 16.9 per cent.
The company closed down its Singapore during the quarter shuttering all 21 stores and it has permanently closed 10 stores in Mainland China during the last year, along with six in Hong Kong and Macau and two in Malaysia.