Sa Sa International Holdings

Sa Sa sales growth slows amid Occupy protests but CEO sees improvement

PUBLISHED : Wednesday, 19 November, 2014, 4:05am
UPDATED : Wednesday, 19 November, 2014, 4:05am

Cosmetics giant Sa Sa International Holdings saw same-store sales growth in Hong Kong and Macau slow to 2.4 per cent year on year from the start of last month to Sunday, down from 6.9 per cent in the six months to September.

Chief executive Simon Kwok Siu-ming said the decline could be attributed to the impact of the Occupy movement but sales were improving week by week.

"It has stabilised and it seems that consumer sentiment is coming back and people feel like they can start spending again," Kwok said at an interim results press briefing yesterday.

The beauty chain announced profit for the six months to September was down 4.9 per cent year on year at HK$339.8 million.

Turnover increased 8.4 per cent to HK$4.22 billion.

Kwok said that although sales in some stores had suffered since the Occupy Central protests began in late September, northern district stores such as those in Sha Tin, Yuen Long, Tuen Mun and Sheung Shui had seen sales increases of about 30 per cent.

"The average ticket price [in those areas] is lower than areas like Causeway Bay but it is not low," he said. "Overall, including both mainlanders and locals, the average ticket is about HK$280. Even in Sheung Shui, the average receipt is between HK$500 and HK$600, so that is not low."

Gross profit margin fell 2.4 percentage points to 44.6 per cent as the mainland tourist base skewed towards travellers from smaller cities with less spending power amid the central government's austerity campaign.

The average mainland customer ticket size decreased by 6.7 per cent.

Kwok said he was not concerned with lower margins as transaction volume was increasing.

"If you have the volume, it makes up for the lower average sales price," he said. "I'm not worried as long as there is the customer demand. You still are making money."

Kwok also said rental pressure might be easing somewhat.

"At least there is room for discussion now. Before, if I [tried to negotiate down], the landlord would say, 'Someone else wants it, bye' and hang up," he said.

Shares of the company dropped 3.97 per cent yesterday to close at HK$5.56, underperforming the Hang Seng Index which fell 1.13 per cent.

The board declared a dividend of 5 HK cents per share and an additional special dividend of 4 HK cents per share, compared with 4.5 HK cents each for both dividends a year earlier.