Protests force extreme makeover for Sa Sa

Cosmetic retail chain Sa Sa (0178) yesterday said it could close up to 25 percent of its stores in Hong Kong over the next 18 months, with most located in tourist areas affected by social unrest.

The news came a day after luxury retailer Chow Tai Fook Jewellery (1929) said it would close 15 stores after their leases expire this year, in the face of unrest and economic downturn.

Sa Sa saw a 35.2 percent year-on-year decline in its third-quarter Hong Kong and Macau turnover reaching HK$1.19 billion for the three months ending December.

The rapid decline of mainland tourist arrivals, which fell more than 50 percent in November, precipitated in a drop of 71.7 percent in the transaction volume of mainland tourists in the three months. Meanwhile, the transaction volume of local customers fell by 9.5 percent, leading to a sales drop of 47.5 percent in the SAR.

Sales decline in December narrowed slightly to 45.8 percent, as pent up demand of local customers drove positive sales growth but no significant recovery was seen for mainland tourists in that month.

The retail and wholesale turnover fell by 35.2 percent during the quarter, while same-store sales fell by 34.7 percent.

The decline was mainly attributed to a decrease of 32.3 percent in total transaction volume, of which the number of transactions of mainland tourists decreased by 50.8 percent and those of local customers dropped by 9.1 percent.

The average sales per transaction of local customers and mainland tourists increased by 3 percent and 3.5 percent respectively, however, the change in the proportion of customer mix led to a 7.5 percent decline in the overall average sales per transaction.

On the other hand, better sales performance was reported in Macau with a double-digit year-on-year sales growth for the period from August to December, thanks to the shift of consumption power from Hong Kong to Macau among mainland tourists, resulting in an 18.6 percent increase in sales in the third quarter for Macau.

The group's overall turnover fell 27.3 percent from a year ago to HK$1.58 billion.

Sa Sa's retail and wholesale turnover in other markets outside of Hong Kong and Macau increased by 15.1 percent, but its sales in e-commerce fell by 10.7 percent year-on-year due to a shift of development focus in this business segment.