Sa Sa International profits slump on increased Korean beauty competition

By

Benjamin Fitzgerald

Published
Jun 28, 2016

Cosmetics retail chain Sa Sa International recorded a 12.8 per cent drop in turnover for its latest fiscal year. For the period ended March 31, the Hong Kong group revenues fell to HK$7845.9 million (US$1011.4 million) from HK$8992.8 million last year.

Domestic retail sales in Hong Kong and Macau fell 14.2 per cent year-on-year to HK$6231.6 million, with profits plummeting 54.3 per cent to HK$383.5 million from HK$838.8 million last year.

The Asian group has always relied on high-priced, luxury products, known among European and American customers for superior quality and long lifecycle, said Sa Sa in a statement.

However, the rise in ecommerce has has seen tourist shopping numbers dwindle instore and consumer buying patterns shift to online, sais the company. This has led to faster market penetration by cheaper Korean products, it said.

In Hong Kong and Macau, transaction numbers dropped by 4.4 per cent while the total average sales value per ticket decreased by 10.2 per cent.

Transactions by mainland China tourists fell 7.1 per cent while average sales value per ticket decreased by 11.2 per cent. For transactions by local consumers, the figures were down 1.2 per cent and 3.5 per cent, respectively.

As as result, the gross profit margin decreased from 44.8 per cent the previous year to 42.6 per cent, while net profit margin fell to 7.4 per cent from 11.9 per cent.

Sa Sa opened four new stores in the last 12 months, reaching 111 stores and two single-brand stores or counters in Hong Kong and Macau.