Sa Sa International sees fall in profits amid drop in tourism

By Natasha Spencer

- Last updated on GMT

Sa Sa interim results fall

Related tags: Hong kong, China

Hong-Kong based Sa Sa International announced a 37.3% decrease in profits in its interim results, highlighting decreasing tourism numbers as a key factor.

In the period ending September 30th 2016, Sa Sa International’s turnover reached HK$3.63 bn (€442.2 mn), a 4% drop from HK$3.78 bn (€460.5 mn) compared to last year’s results.

Sa Sa totalled profits of HK$96 mn (€11.7mn), indicating a 37.3% drop from last year’s HK$153 mn (€18.6 mn) during the same period.

Purchasing patterns

Despite a continued reduction in tourist footfall, the total number of transactions by local and mainland Chinese consumers increased by 0.2% and 4.4% respectively.

However, the average sales value per transaction saw a slump, decreasing by 6.3% for purchases made by local consumers and 6.6% for tourists. This was reflected in the leading cosmetics company’s retail sales in Hong Kong and Macau, which fell by 3.6% from HK$3 bn (€365.5 mn) to HK$2.9 bn (€353.3 mn).

The Hong Kong market has witnessed changing consumer attitudes towards product selection. As the Hong Kong dollar strengthened and the Chinese Yuan deteriorated, these have also been cited as having a detrimental impact on Sa Sa’s interim results.

To reflect the evolving marketplace, Sa Sa focused on adapting to consumer demands by speeding up product launches, combatting lengthy product cycles with shorter alternatives, reducing price points of on-trend lines and creating innovative marketing displays.

The shopping experience

Sa Sa is currently concentrating on increasing sales by bringing these efficient product cycles to market through facilitated CRM processes, online marketing and online-to-offline (O2O development.)

The O2O landscape has been developing rapidly throughout APAC in recent years. As a result, Sa Sa hopes to maximise this opportunity to improve the shopping experience for its customers through creating online operations for digital marketing that connect with its physical stores.

“We...remain resolute in our belief that we can further strengthen our competitiveness in the coming years and convert difficult challenges into golden opportunities, such as those offered by O2O, by changing consumer behaviour and by the growing affluence of the less developed regions of Mainland China”​ said Dr Simon Kwok, BBS, JP, Chairman and CEO of the Group.

This year, the cosmetics brand launched a new mobile app to reflect the market's preference for mobile over desktop usage. Sa Sa collaborated with online retailer Kaola to complement this release and existing partnerships with T-Mall, JD.com and suning.com.

It used these channels to promote its range of Korean products, which it produced to reflect the popularity of the K-beauty and K-pop influences trending through APAC and the wider markets. As a result, Sa Sa saw its sales increase by 51.5% in Hong Kong and Macau, with its own brands and exclusively distributed products dropping by 2.5% from 41.3% to 38.8%.

Consumer support

On 21st November, two days before the interim report was released, Sa Sa International announced it had been presented the award at the “World’s Excellent Brands Awards 2016-2017” by China Media Network (CMN).

The prestigious accolades are given to those brands that demonstrate an awareness, recognition, leadership and representativeness of tourism-related global brands by an evaluation committee and selection of tourists.

Following public voting and evaluation, Sa Sa received the “World’s Excellent Brands Awards” and has previously been awarded the “Most Popular Hong Kong and Macau Brand” by CMN.

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