The 2020 Chinese New Year Period was all but ostentatious for the chain retailer. The Hong Kong based company saw its sales falling by 76.9% in Hong Kong and Macau during the period, compared to the same period last year.
In the Hong Kong region, Sa Sa’s retail sales plummeted by 77.9% year on year. According to the company, such decline was mainly attributable to the novel coronavirus outbreak, resulting in further decline of mainland tourist arrivals and poor local consumer confidence.
Decline in total transaction volume
Indeed, figures from the Hong Kong Immigration Department show a decreased by 85.5% on a year-on-year basis during the Chinese New Year Period total transaction volume of which the number of transactions of mainland tourists recorded a decline of 92.1% while that of local customers dropped by 8.0%.
Furthermore, the average sales per transaction of mainland tourists and local customers decreased by 14.5% and 25.6% respectively. As the proportion of mainland tourists with higher consumption amounts decreased significantly, this led to a decrease of 51.5% in overall average sales per transaction.
Similar to that in Hong Kong, retail sales in Macau plunged by 73.4% year on year. The downturn was mainly caused by the almost 70% drop in total transaction volume, of which the number of transactions of mainland tourists decreased by 76.5% and that of local customers declined by 29.4%.
Consequently, the group has announced new measures to reduce losses. In addition to downsizing the retail store network in Hong Kong, reducing staff costs and lowering the inventory level, all executive directors will take the lead in reducing salary by 75% for three months as the first step in a new round of cost reduction initiatives.
The novel coronavirus outbreak is deeply affecting the economy of China and neighbouring countries, with large urban areas being quarantined, trade shows being rescheduled or cancelled and factories temporary closed. The number of air travellers also collapsed, affecting airports, hotels, restaurants and tourist sites. By extension, luxury and premium brands will probably be impacted too.