Sa Sa shutting shops: Temporary closures of 21 doors in Hong Kong and Macau as coronavirus bites

By Amanda Lim contact

- Last updated on GMT

Sa Sa to temporarily suspend operations of 21 stores in Hong Kong and Macau. ©Sa Sa International
Sa Sa to temporarily suspend operations of 21 stores in Hong Kong and Macau. ©Sa Sa International

Related tags: Hong kong, COVID-19, retail

The impact of the novel coronavirus (COVID-19) has forced the cosmetics retailer Sa Sa to temporarily suspend operations of 21 stores in Hong Kong and Macau as part of cost-saving measures.

According to Sa Sa International’s press statement, the outlets closed include six in Kowloon, eight in the New Territories and three in Macau.

“Sa Sa, like its Hong Kong retail peers, is suffering from adverse market conditions. The group is taking various measures to save expenditure in all directions,” ​said the Hong Kong-based company.

The Group has adjusted its manpower deployment in various departments and front lines in response to business needs.

This news followed the company’s announcement that its executive directors will be taking a 75% pay cut for three months to deal with the COVID-19.

“In addition to downsizing the retail store network in the Hong Kong SAR, reducing staff costs and lowering the inventory level, all executive directors will take the lead in reducing salary by 75% for three months as the first step in a new round of cost reduction initiatives,”​ said Dr Simon Kwok, chairman and CEO of the Group.

Additionally, the company’s senior management team will take a pay cut of 40% while lower-level employees will have their salaries decreased by 10% to 15%.

The group said that it hoped that the pay cuts, along with additional streamlined measures will help it save costs by about 30% in the short term.

“In view of the continuous efforts made by the Hong Kong and Macau SARs to control the spread of the outbreak, seriously affecting the people traffic, the Group will closely review the market condition and adjust its product strategies,” ​said Kwok

Disappointing holiday period

The decision to temporarily shut the stores followed a turbulent Lunar New Year period for the company.

During the Lunar New Year holiday, Sa Sa saw sales dive 76.9% YoY in Hong Kong and Macau as the coronavirus outbreak deterred shoppers and tourists alike.

Retail sales in Hong Kong plummeted by 77.9%. Sa Sa attributed the weak performance in Hong Kong to “poor local consumer sentiment” and the decline of China tourist arrivals.

According to the Hong Kong Immigration Department, the number of Chinese tourist arrivals decreased by 85.5% on a YoY basis during the Lunar New Year period.

“The plunge in total store traffic led to a drop of 54.4% in the total transaction volume of which the number of transactions of mainland tourists recorded a decline of 92.1% while that of local customers dropped by 8.0%,” ​said the company.

For the same reasons, Sa Sa’s Macau business suffered a 73.4% decline in sales.

The number of transactions by China tourists decreased by 76.5% while local transactions declined by 29.4%. In total, the company’s total transaction volume plunged 70%.

Tough circumstances

The COVID-19 outbreak is the latest blow for the company, which was forced to exit Singapore in bid to stem losses from the drawn-out Hong Kong protests.

Additionally, its Singapore business had been suffering losses for six consecutive years, even after its attempts to improve performance by restructuring and taking measures to drive sales

The company said it decided to shutter all Singapore stores to concentrate its resources on its core markets, including Hong Kong, Macau and China.

Sa sa said it planned to redirect its resources to invest in a China expansion as well as its e-commerce business, which it hoped could help capture lost traffic in Hong Kong.

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