Sa Sa has mixed quarter
In this article (5)
Sa Sa sales in Hong Kong and Macau grew by 2.4 per cent for the first quarter, but same-store sales dropped by 2.5 per cent.
Sa Sa says the unaudited figures were weaker than the previous quarter, affected by a particularly quiet June which was marked by typhoons and extended torrential rain. With a cool-down in Korean products and less store traffic, sales volume fell with fewer transactions by local and mainland tourists, down 4.1 and 6.4 per cent respectively.
“However, some customers switching out of Korean products and into broader alternatives resulted in demand for higher-priced products,” says the retailer. “As a result, the average purchase per transaction of local and mainland customers has started to rise gradually, up 3.1 and 2.9 per cent respectively.
“Our strenuous efforts to improve house-brand offerings is beginning to bear fruit, with the first quarter seeing improvement in the house-brand mix as well as gross profit margin in the Hong Kong and Macau markets. However, the increase in gross profits is not yet sufficient to offset the weakness in June’s sales performance and the one-off costs of Hong Kong warehouse relocation.”
The group says it is cautiously optimistic about the Hong Kong and Macau markets and continues to invest in residential shops and extra staffing as well as launching a new own-label brand.
It says these strategies will increase the group’s competitiveness but also exert short-term cost pressure.
Sa Sa’s unaudited figures for the quarter to the end of June show retail and wholesale turnover increased by 2.1 per cent. In Hong Kong and Macau, the number of transactions eased by 0.4 per cent, while the average sales per transaction grew by 2.8 per cent.
The group’s retail and wholesale turnover in other markets (including China, Malaysia, Singapore, Taiwan and e-commerce) rose by 0.5 per cent for the quarter.
“Stepping into the second quarter, sales performance in the Hong Kong and Macau markets has
shown conspicuous improvement,” says chairman/CEO Kwok Siu Ming Simon. “While the group is strengthening choices in selected product categories, it is anticipated sales in Hong Kong and Macau will continue to improve in the second quarter.”
Questions & Answers
Q.What factors specifically contributed to the decline in same-store sales for Sa Sa in the first quarter?
What factors specifically contributed to the decline in same-store sales for Sa Sa in the first quarter?
Same-store sales dropped by 2.5 per cent, affected by a particularly quiet June due to typhoons and heavy rain. A cool-down in Korean products and less store traffic also contributed to the decrease.
Q.How did Sa Sa manage to increase its average purchase per transaction despite lower overall sales volume?
How did Sa Sa manage to increase its average purchase per transaction despite lower overall sales volume?
Customers switching from Korean products to higher-priced alternatives led to a gradual rise in average purchase per transaction. Increased demand for broader alternatives contributed to this trend for both local and mainland customers.
Q.What is Sa Sa doing to improve its performance and competitiveness in the Hong Kong and Macau markets?
What is Sa Sa doing to improve its performance and competitiveness in the Hong Kong and Macau markets?
The group is investing in residential shops, increasing staffing, and launching a new own-label brand. It is also strengthening choices in selected product categories to boost competitiveness.
Q.Was the increase in gross profits sufficient to cover the challenges faced during the quarter?
Was the increase in gross profits sufficient to cover the challenges faced during the quarter?
No, the increase in gross profits was not yet sufficient to offset the weakness in June’s sales performance. It also could not cover the one-off costs incurred from the Hong Kong warehouse relocation.
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