‘Challenged by headwinds’: Sa Sa operations hit by low consumption, rising outbound travel trends

By Amanda Lim

- Last updated on GMT

Sa Sa’s latest quarterly highlights major challenges in key markets Hong Kong and Macau ©Getty Images
Sa Sa’s latest quarterly highlights major challenges in key markets Hong Kong and Macau ©Getty Images
Beauty retailer Sa Sa’s latest quarterly highlights major challenges in key markets Hong Kong and Macau such as reduced local consumption and increased outbound travel.

Hong Kong-headquartered Sa Sa International Holdings Limited reported that for the quarter ending September 30, the Group’s turnover was HKD975.9m (USD125.6m), a decline of 11% year over year.

According to a press statement, the group said its operations “have been challenged by headwinds” that have persisted since the first quarter.

Amidst the weak macroenvironment, the retailer has observed low consumer consumption.

This has been exacerbated by the travel trends among local consumers in Hong Kong and Macau.

The group has observed locals travelling more frequently to Southern China, such as Shenzhen in hunt for better bargains.

Additionally, overseas travel has also increased, partly due to the Hong Kong dollar's relative strength against other currencies, including the Japanese Yen, the firm remarked.

“Northbound travel numbers of local residents appear to have settled down at current levels and has become part of the norm significantly diminishing local consumption. The second quarter also encompassed the summer holidays, the peak of overseas travel by local residents.

“The long weekend holiday on the July 1 anniversary of the establishment of the Hong Kong Special Administrative Region saw a year-on-year high double-digit increase in the number of Hong Kong residents travelling abroad.”

It noted that the number of outbound Hong Kong residents significantly exceeded the number of inbound Mainland Chinese travellers by 2.9 times during this period.

At the same time, consumption among Chinese tourists has been restrained in light of the sluggish economy, despite the raised tax-free allowance that took effect in July.

“Though it was a positive step to see the tax-free allowance for Mainland China visitors to Hong Kong and Macau raised from RMB5,000 to RMB12,000 with effect from July 1 2024, we have yet to see any meaningful impact on tourist sales.”

According to the firm, approximately half of tourists entering Hong Kong are day-trippers.

“The tendency of tourists is to opt for same-day round trips with approximately 50% of tourists entering Hong Kong opting not to stay overnight presumably due to high hotel costs. This has resulted in a reduction in the group’s turnover from tourism.”

Against these challenging conditions, Hong Kong and Macau revenue declined by 16.4% to HKD718.3m (USD92.4m)

In light of this, the company has been taking steps to adapt to the market needs.

This included a focus on more “value-for-money” beauty products.

According to the firm, this strategy has helped to mitigate the decline in Hong Kong and Macau.

“The group has responded to evolving consumer trends by introducing a range of high-quality products that offer exceptional value for money. And this has contributed to reducing the year-on-year decline in the second quarter as compared to the first quarter.”

Additionally, it is exploring opportunities in non-tourist areas to better serve local consumers and in prime tourist spots to expand its coverage.

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