Sa Sa reports 26.7% rise in profit despite slowing China growth

Despite reports that Chinese tourist numbers are dwindling, cosmetic companies like this Hong Kong-based retailer are still posting strong numbers.

According to Sa Sa reps, growth in the number of same-day-return tourists fell from 37.2 to 21.0% in the first nine months of 2013, declining numbers that were reflected in the company's Golden Week holiday sales last month, which rose a less-than-expected 11%.

In the company's latest earnings statement, CEO Simon Kwok revealed that sales to mainland visitors continued to insulate the $3 billion company, but added that it remains ‘cautiously optimistic’ for the coming year as it continues with its expansion in the Asia-Pacific region.

“Looking ahead, we will ride on our brand strength with high management flexibility, and prudent development strategy to drive expansion in Hong Kong, Mainland China and other markets,”​ says the chairman.

Industry analysts keeping watchful eye​

The specialty cosmetics chain has a vast presence in Hong Kong, Macau, Mainland China, Taiwan, Singapore and Malaysia offering its own range of skin care, fragrance, hair care and BFW supplements as well acting as a representative for over 100 international cosmetics brands.

According to Forbes, the company’s Hong Kong-traded shares have risen by more than 60% in the past twelve months, and that although its’ recent announcement didn’t include any details about profit, Sa Sa is now in a position to be “cautiously optimistic​” about this quarter.

The business magazine has been keeping a close eye on the Asian company of late, ranking its founders Simon and Elenor Kwok as No. 33 on its’ 2013 'Hong Kong Rich List'.

Building momentum in Asia​

Back in 2010, Cosmetics Design reported that the cosmetics retailer had had a strong online sales year, bringing in a 2009 annual turnover of HK$4.1bn (€430m), up 13.9% from the previous year whilst also recording improved sales in Singapore, Malaysia and Taiwan, as well as an increase of more than 50% in online sales.

Then, Kwok attributed the strong performance to increased spending by residents and tourists, as well as an increase in the number of transactions, which although affected initially by the H1N1 outbreak and financial crisis, improved during the second half of the year.