Sa Sa International to close up to 25 per cent of stores in 18 months as Hong Kong retail slump claims more casualties

Sa Sa International, Hong Kong's biggest cosmetics retailer, plans to shutter up to a quarter of its stores in the city over the next 18 months, blaming the “unabated difficult” business environment for its latest struggle. It is considering asking employees to take no-pay leave to lighten its operating costs.

The skin care and cosmetics chain operator has earmarked about 20 to 25 per cent of its outlets in Hong Kong for closures, according to a stock exchange filing. Most of them are located in the tourist areas “most severely affected” by the downturn as the industry slumped amid seven months of anti-government protests.

“In view of the unabated difficult operating environment in the Hong Kong, the group will continuously adopt various cost control measures,” it said. The group has begun to downsize its store network and proactively negotiate with the landlords on rental reduction to restore store profitability as early as possible.”

Hong Kong’s struggling retail sector has reported the worst figures on record amid the social unrest, with at least 5,600 job redundancies and 7,000 company closures expected in the coming six months, according to a survey conducted by Hong Kong Retail Management Association.

Businesses in the city saw disruptions to 38 per cent of their operating hours since in July, according to Lawrence Wan, senior director for advisory and transaction services at CBRE. Nine international brands withdrew from Hong Kong and closed 30 stores in 2019, he said, adding that more jewellery, watch and cosmetics retailers will shrink their business.

Sa Sa has already closed six stores in Hong Kong in the third quarter ending December 31, during which its retail sales in Hong Kong and Macau dropped 35.2 per cent year on year. That is in addition to a 24.1 per cent decline in the preceding quarter.