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Online pivot, store closures not enough to save Sa Sa’s bottom line

Despite restructuring, streamlining its store count and developing digital sales channels, the lack of inbound tourists into Hong Kong continues to impact Sa Sa International’s bottom line. 

Chairman and CEO Simon Kwok said in a stock-exchange announcement that – excluding impairments – the company anticipates a loss of about US$38.6 million to $44 million (HK$300 million to HK$340 million) from continuing operations during the March year. That compares with a loss of $26.4 million the prior year. 

Impairments and depreciation is likely to expand that loss by a further $6 million to $10 million, but that is a lot less than last year, when they drove the loss up to $66 million. 

Sa Sa International operates the SaSa chain of beauty stores that have traditionally derived a large share of their sales from inbound mainland Chinese tourists. But borders have been all but closed for more than a year leading to devastating sales reductions for the luxury sector and beauty retailers.

“In the face of the Covid-19 pandemic, management has responded swiftly to take effective actions, including short-term cost-reduction measures and long-term cost-structure optimisation plans, with a focus on rationalising the store network to restore profitability as soon as possible,” Kwok said. 

“The group has also been actively investing in the development of online business, so as to accelerate the integration of online and offline operations and capture the growing online consumer base, laying a solid foundation for the group’s long-term growth in the future.”

As at the end of March, Sa Sa International had cash and bank balances of about $68 million.  

Final full-year results will be announced prior to June 30. 

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