China dulls Sa Sa's shine by Karen Chiu
Sa Sa International Holdings' (0178) interim profit beat market expectations and
rose 26 percent from a year earlier to HK$282.1 million but its mainland operations continued to pile up losses.
Sa Sa shares rose 8 percent to HK$5.94 yesterday, marking the highest level for the year.
Revenue jumped 21 percent in the six months to September to HK$3.38 billion thanks to strong performance of its core Hong Kong and Macau businesses.
The firm raked up a total net profit of HK$283 million,
up 27 percent, thanks to the rising number of mainland tourists.
Rents at its Hong Kong and Macau outlets
rose by 37 percent in the first half, with 15 stores having to renew their leases, chairman Simon Kwok Siu-ming said.
But rental costs still managed to take up 11.4 percent of sales and the ratio is expected to further ease to 11 percent during the second half.
Looking forward, he remains optimistic about the group's sales during the Christmas period which followed better sales in the third quarter in all of its three major operating areas.
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Same store sales have grown by 18 percent in Hong Kong and Macau, while a 10.4 percent growth was recorded in the mainland in the third quarter," he said.
The cosmetics brand opened seven stores in Macau in this financial year and five in the mainland.
But hurt by the slowdown in the mainland's economy and rising expenditure due to management restructuring, Sa Sa's losses of its mainland business touched HK$19.82 million in this period,
The group said it is stepping up investments to improve its management structure in the mainland and hiring more employees.
Kwok expects to narrow the loss in the future, believing it is still worthwhile to invest in the mainland.
By March next year, Sa Sa will be operating a
total of 264 stores, including 100 in Hong Kong and Macau, and 62 in the mainland.
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"