Home market hurts Sa Sa International sales

Hong Kong beauty products retail Sa Sa International has reported a 7.2 per cent decline in sales for the March quarter.

The company’s home market and Macau were to blame, with same-store sales falling 10.8 per cent and combined retail and wholesale turnover down 8.4 per cent.

Sa Sa is one of the bellwethers of the broader Hong Kong market because it serves both local consumers and tourists, appealing to more mainstream clients than the luxury watch and jewellery retailers which often disproportionately affect total Hong Kong retail sales figures.

In a stock exchange filing, Sa Sa International blamed the sales decline on a 6 per cent fall in total transaction volume, of which the number of transactions of local customers and mainland tourists decreased by 8.8 per cent and 3.7 per cent respectively.

“The average sales per transaction of local consumers and mainland tourists decreased by 0.7 per cent and 5.9 per cent respectively, which resulted in a 3.5 per cent decline in total,” the company said.

“The weaker sales performance was mainly due to high base effect. The hot trend of some trendy product categories last year has been weakening while the group’s newly launched products could not fully compensate their sales decline. In addition, a number of new pharmacy stores selling skincare and cosmetic products have opened new stores in tourist hot spots aggressively, resulting in intensified competition and lower-than-expected sales at Sa Sa.”

The company says it plans to open new stores to enhance its store network and boost its competitiveness “under reasonable rental condition”.

“The group is adjusting its business strategies to adapt to the changing consumer preferences and competitive landscape. The first action is to change towards a more balanced product mix.”

Sa Sa International says it will also increase its range of high-end products and focus on its own-label products which offer better margins.

Another step Sa Sa plans to arrest falling sales is speeding up its investment in digitalisation and IT, using big data to formulate better product strategies.

The new Express Railway Link and Hong Kong-Zhuhai-Macau bridge have so far failed to bring about the expected stimulus to the retail industry, the company said.

“Looking ahead, the group believes the benefits of the two mega infrastructure projects will gradually emerge under the favourable policy of the Greater Bay Area. The group remains cautiously optimistic about the outlook of Hong Kong and Macau markets in the long run.