Sa Sa interim profit up 42.3%
Company plans 100 mainland stores by 2013
Sa Sa International Holdings Ltd, the largest cosmetics retailer in Hong Kong, reported Thursday that its profit for the first half of financial year 2010-11 ended September 30 increased 42.3 percent to HK$176.3 million compared with HK$123.9 million last year.
Despite its less than stellar past performance on the mainland, it plans to expand its presence there from 19 retail outlets currently to 100 by 2013.
Sa Sa Chairman Simon Kwok told a media briefing that this is now in fact the company’s strategic priority, although he readily acknowledged that its mainland operations is the group’s weakest link.
The firm’s turnover expanded by 19 percent to HK$2.1 billion compared with HK$1.76 billion over the same period in 2009. The company declared an interim dividend of 3 Hong Kong cents and a special dividend of 6 Hong Kong cents, unchanged from last year.
Meanwhile, shares of Sa Sa jumped by as much as 23 percent to a record high after the company had proposed a bonus share issue to existing share holders.
Shares climbed as high as HK$8.81 in early afternoon trading Thursday before closing at HK$8.56, a gain of 19.55 percent.
During the mid-session trading break, Sa Sa proposed a bonus issue of one share for every existing share held after it posted news of its six-month rise in profit and turnover.
The chain, which has 157 retail stores across the nation, Singapore and Malaysia, saw a profit rise in most areas except the mainland.
Its 72 shops in Hong Kong and Macao saw turnover of HK$1.63 billion in the first half, contributing 77.6 percent of the group’s income.
But turnover from 19 retail outlets in four mainland cities – Beijing, Shanghai, Tianjing and Suzhou – stood at HK$60 million for a loss of HK$10.8 million during the period, albeit slightly less than the HK$10.9 million in the red last year.
“Losses in the mainland stores have been further controlled over the time, and we expect our mainland business to break even when all 100 shops are put into operation by 2013,” Kwok added.
The 100 planned retail outlets are to spread out among three municipalities and six provinces on the mainland, according to the company.
Sa Sa is regarded as a cosmetic shopper’s destination for mainlanders visiting Hong Kong because the city does not impose duties on the goods and some products are sold at cheaper prices than on the mainland.
“As Sa Sa has lost its price advantage when competing with other retailers on the mainland, it is planning to strengthen its networks and brand equity to gain dealership from more brands in its shops,” said Louis Wong, director with Phillip Securities. “For Sa Sa, it is not whether or not to expand its networks on the mainland – it is a must.”
Reuters contributed to this story.
China Daily
(HK Edition 11/19/2010 page3)
http://www.chinadaily.com.cn/hkedition/2010-11/19/content_11574422.htm