The Hong Kong drugstore chain has delivered double-digit growth in quarterly sales, driven by tourist and online spending, after axing its Chinese stores
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Key Takeaways:
- Third-quarter revenue rose 12.5%, boosted by higher same-store sales in its core markets of Hong Kong and Macao
- E-commerce revenue climbed 14.9% after a switch to online-only sales in mainland China, but the share of overall turnover barely increased
A corporate makeover has added a little luster to the latest sales figures from cosmetics retailer Sa Sa International Holdings Ltd. (0178.HK).
The long-established Hong Kong brand put all its Chinese outlets under the knife last year, deciding to go purely online in the mainland market in a major strategy shake-up. The pain may be starting to pay off, judging from the company’s latest results, although investors have yet to be convinced.
It’s a familiar story of Chinese retail. After a fitful recovery in consumer spending, several drugstore chains have scaled back their bricks-and-mortar presence in mainland China over the past two years. Shops selling multiple beauty brands have faced particularly stiff pressure from sky-high rents, fragmented footfall and increasing incursions from digital sales channels.
Sa Sa started out in the 1970s as a tiny family-owned outlet in a Hong Kong mall, developing into a stalwart of the territory’s retail scene with its distinctive pink storefronts. It operated for two decades in the mainland market but last year made a complete retreat from offline retailing in China, shuttering its entire network of 18 stores in the face of sustained earnings pressure. Another cosmetics chain, Manning, announced late last year it was following suit. With the departure of Manning – owned by DFI Retail Group Holdings Ltd. (D01.SI) – only Watson was left with a physical presence in China out of Hong Kong’s big three drugstore brands.
The shift responds to changing consumption patterns in China. Where once a new store …