Nowhere to hide for Hong Kong retailers as Sa Sa cuts directors’ pay amid slump in cosmetics sales, disappearing mainland customers

Sa Sa International, Hong Kong’s biggest cosmetics retailer, is asking its executive directors to take a 75 per cent pay cut for three months to help reduce costs, after sales during the Lunar New Year holiday slumped amid the coronavirus outbreak.

The move follows a report showing the group’s sales in Hong Kong crashed by 77.9 per cent in the first week of the Chinese New Year as the coronavirus outbreak kept mainland tourists at home. Including Macau, sales slumped 76.9 per cent.

The company compared its sales data during the January 25 to 31 week with the same festive week last year that fell on February 5 to 11, it said in a Hong Kong stock exchange filing on Thursday.

The crunch suggests there is no immediate relief for Hong Kong retailers after they took a beating from months of anti-government protests in the city for much of 2019. The viral outbreak has now undermined efforts by Sa Sa and other retailers to shift their focus to the mainland market as China locked down cities and curbed travels to contain the outbreak.

“Street front shops in particular have been more affected by the drastic reduction in tourist numbers, and will be facing extra difficulties,” said David Ji, head of research and consultancy of Greater China at Knight Frank. “The virus outbreak has had a big impact on Hong Kong’s retail and tourism industry.”

The number of mainland tourists in Hong Kong shrank by 85.5 per cent from January 24 to 30 from a year earlier, according to government data. Sa Sa said transactions involving mainland tourists plunged 92.1 per cent in Hong Kong, and 76.5 per cent in its Macau stores.