Sa Sa net soars 276pc amid return of tourists

Sa Sa International (0178) said its net profit soared 276 percent to HK$219 million for the year ended March 2024 amid the return of tourists.

But revenue in the current quarter decreased almost 10 percent amid the northbound travel wave among Hongkongers.

The Hong Kong-based cosmetics retailer resumed a final dividend of 5 HK cents per share, distributing about 70 percent of the profit for the year and promised to seek to "maintain a steady dividend policy" in the future.

Shares of Sa Sa jumped nearly 8 percent to HK$0.82 apiece yesterday.

Benefiting from China's reopening in early 2023, Sa Sa saw its total revenue grow 24.8 percent to HK$4.37 billion, driven by the offline sales in Hong Kong and Macau that inflated by 35.1 percent to HK$3.2 billion.

In the mainland, online sales surged 74.5 percent surge in the second half from October 2023 to March 2024, but full-year turnover increased by 9.7 percent only to HK$581 million.

Gross profit expanded 27.3 percent year-on-year to HK$1.78 billion, with the gross profit margin improving by 0.8 percentage points to 40.8 percent.

Sa Sa noticed that consumers were willing to try niche brands, helping it achieve a higher margin.

As of March, Sa Sa had 26 stores in the core tourist areas across Hong Kong and Macau, only 58 percent of the pre-pandemic number.

It opened five stores in the last financial year.

When asked about the expansion, chairman Simon Kwok Siu-ming said it depends on whether the industry will see improvements and if the administration will release supportive measures. Kwok underlined that the retail sector is desperate for an increase in footfall and a rise in duty-free allowance of 5,000 yuan (HK$5,374) for a trip per mainland tourist.

Impacted by Hongkongers' outbound travel wave, Sa Sa's total turnover from April 1 to June 16 already recorded a fall of 9.5 percent from one year ago, as revenue in Hong Kong and Macau contracted by 21.8 percent over the same period.

Kwok also revealed that the average spending of locals stayed between HK$230 and HK$250 per receipt, while that of mainland tourists fell by 12.5 percent to HK$420.

But Kwok remains confident in Hong Kong's retail market and believes the northbound travel wave will gradually subside.