Profits at Sa Sa looking pretty

Its new stores at non-tourist areas meet the demand of same-day mainland travellers

PUBLISHED : Friday, 16 November, 2012, 12:00am
UPDATED : Friday, 16 November, 2012, 2:47am

Sales at Hong Kong's biggest cosmetics chain, Sa Sa International, bucked the lukewarm trend in the city's retail sector.

Sa Sa's turnover rose 21.2 per cent, and net profit jumped 25.7 per cent from a year earlier to HK$282 million in the six months to September 30 as it opened more shops in non-tourist areas.

"The strategy of opening more stores in non-tourist areas enables us to leverage on the demand from same-day travellers from the mainland as well as local customers," Guy Look, chief financial officer of Sa Sa, said at a news conference yesterday.

Same-day travellers, most of whom are cross-border parallel traders, have been targeted by a government crackdown since September. The exercise aims to restore the peaceful lifestyle of residents of areas near the border, Sheung Shui in particular.

However, the crackdown has yet to affect the sales of Sa Sa. From October 1 until yesterday, sales at Sa Sa's 97 shops in Hong Kong and Macau registered growth of 23 per cent year on year. Same-store sales rose 17.8 per cent.

"We are quite optimistic about Christmas sales after stronger than expected third-quarter sales," Sa Sa chairman Simon Kwok said.

In the six months to September 30, sales at shops in Hong Kong and Macau rose 20.3 per cent year on year, while sales at the 53 shops on the mainland jumped 54 per cent.

Total turnover, including sales from Singapore, Malaysia and Taiwan, grew 21 per cent to HK$3.37 billion.

Losses at the mainland operations widened to 17 million yuan owing to start-up costs for new shops. Existing shops on the mainland, however, have started to turn around, posting 1.6 million yuan in net profit.

During the reporting period, the company renewed the rental contracts of 15 shops in Hong Kong and Macau, with rents rising 37 per cent overall.

It plans to increase the number of shops in Hong Kong and Macau to 100 and the number on the mainland to 62 by March, bringing the total to 264 from 243.

Net profit margin increased to 8.4 per cent from 8.1 per cent as Sa Sa increased the share of its own-brand products in the retail mix.

Out of earnings per share of 10 HK cents, the retailer declared an interim dividend of 7 HK cents per share.