Portfolio enhancement: Beauty retailer Sa Sa to expand product offerings as COVID concerns grow

The Hong Kong authorities recently imposed new restrictions including a strict 6 pm dining curfew to tackle its fifth wave of COVID-19 infections.

The group expects that this would negatively affect its sales for the next quarter.

“In the core markets of the Hong Kong and Macau SARs, the group expects that the fifth wave of the pandemic will have a negative impact on sales and is closely monitoring the latest development of the pandemic and adjusting its business strategy in a timely manner,” ​said Dr Simon Kwok, chairman and CEO of Sa Sa International.

As part of its strategy to counter the impact of the latest wave of infections, Kwok said the company would undertake cost-cutting initiatives as well as expand the offerings in its product portfolio.

“[The company] will expand its product portfolio by adding new categories with the aim of increasing footfall and sales, as well as enhancing the profitability of its stores and the group’s overall competitiveness,”​ said Kwok.

“These will serve the purpose of enabling the Group to reach breakeven the soonest, even before the Hong Kong SAR reopens its border.”​

The company had identified that the health and fitness category would become more important for beauty retailers like itself.

“The COVID-19 pandemic has sparked consumers' ardent demand for health and fitness products, which is bringing new impetus for growth to the group,” ​said Kwok.

In August, the firm expanded its health and fitness product portfolio, obtaining ole distributorship for the South Korean health and beauty brand BB Lab, which is best known for its collagen powders and slimming jellies.

“In the future, we will continue to introduce more exclusive brands to enrich our health and fitness product portfolio, aiming to bring more diversified and quality products to our customers,”​ said Kwok.

The Hong Kong-based retail chain reported that its retail and wholesale turnover in the third quarter ending December 2021 increased by 4.7% year on year (YoY). However, sales were down 53.7% compared with the same period in the 2018-19 fiscal year.

In Hong Kong, Sa Sa said sales were boosted by the consumption voucher scheme in October, along with promotional campaigns and the introduction of new products.

As a result of these initiatives, same-store sales in Hong Kong and Macau increased 7.8% YoY.

Sa Sa also experienced difficulties in its overseas markets. In China, the COVID-19 outbreaks saw its same-store sales decline by 22.2% YoY.

As the consumption sentiment in China fell short of expectations, the group decided to slow down the expansion of its retail network and refocused its efforts on enhancing the performances of its existing stores.

In Malaysia, the company resumed business in mid-September as pandemic restrictions lifted. Sales rose by 4.4%, but compared to the 2018-19 fiscal year, sales were down 27.9%.

Sa Sa’s online business continued to grow by 19.9% YoY. The increase was attributed to the revamp of its Hong Kong e-store.