Sa Sa plans new store concepts

In Mainland China, the stores’ profitability continued to improve, but weak operational and product management led to a decline in turnover, as well as an increase in the inventory provision. Overall turnover for Mainland China operations decreased to HK$148.9 million, a decrease of 8.7 per cent in local currency terms, while same store sales growth in local currency decreased by 9.8 per cent for the period. Loss for the period amounted to HK$24.5 million. The group has recognised the need for more management resources to improved management, and is currently using external management resources on a contract basis to allow for more time to develop its own management structure and training. The group is also seconding experienced staff from Hong Kong to improve attractiveness of product offerings and inventory management.

Taiwan

Turnover in the group’s Taiwan business decreased to HK$130.2 million during the period, representing a drop of 2.2 per cent in local currency terms. Same store sales fell 8.7 per cent in local currency. The number of mainland China consumers in Taiwan is expected to increase in view of the country’s enhanced infrastructure and retail space, and the introduction of unlimited visa quotas for high-end Mainland Chinese tourists who have greater spending capacity. The group has already opened stores in tourist locations to tap the potential of increasing in mainland Chinese tourist arrivals.

Singapore & Malaysia

Flat sales across the Sa Sa Singapore network has prompted a rethink of the brand’s local network.

In the first half year, Sa Sa reported turnover of HK$112.8 million (S$20.445 million) in Singapore, remaining flat in local currency terms over the same period last year.

“The group will continue to build scalability and profit potential by closing inefficient stores and opening stores in new malls with good potential,” the company said in its interim trading statement.

Meanwhile, turnover for Sa Sa Malaysia was HK$141.9 million, an increase of 2.5 per cent in local currency terms over the same period last year. However, same store sales decreased 8.5 per cent in local currency.

“Sales and profit growth were restrained by the implementation of GST [on April 1], which adversely impacted store productivity during the transitional period. This effect is expected to be normalised in the second half.”

Chairman’s view

Chairman and CEO Dr Simon Kwok put on a brave face on the results:

“Sa Sa has a long track record of delivering outstanding success in all economic climates and in the face of the most severe headwinds and difficulties. We firmly believe that in spite of the current difficult business environment we are now facing, we can still turn challenges into opportunities and further consolidate our competitive advantages. The flexibility of our business model, with an ability to rapidly adapt to new circumstances, markets and trends, will continue to support our position as a leading provider of beauty products in the Asia Pacific. We also believe that the resilience and adaptability of our loyal staff and the forward vision of our outstanding management team will ensure that we deliver sustained, satisfying growth for many years to come.”