Hong Kong’s largest cosmetics retailer Sa Sa International Holdings said Wednesday it will shut all its shops in Taiwan after losing money for six consecutive years.
Sa Sa has 20 stores across the island according to its official website, and employs about 260 local staff. All the shops are expected to be closed by the end of March, the company said in a statement.
The retailer’s Taiwan operation has been a drag on the group’s business, with turnover decreasing by 11.5% to 154.3 million Hong Kong dollars ($19.7 million) during the 10 months ended in January.
“The group’s performance in Taiwan has been persistently weak, and the possibility of improvements is low into the foreseeable future,” said Simon Kwok, Sa Sa chairman and CEO.
The Hong Kong-listed retailer operates about 280 shops — mostly in Hong Kong and mainland China — and employees about 5,000 staff. It also has operations in Singapore, Malaysia and Macau.
Exiting the Taiwan market will allow Sa Sa to rationalize its resources to gear up for better opportunities in other markets and the development of e-commerce businesses, the statement said.
The company said it believed the retail market in mainland China, Hong Kong and Macau would benefit from major infrastructure projects linking the mainland and the two special administrative regions, such as the Guangzhou-Shenzhen-Hong Kong Express Rail Link and the Hong Kong-Zhuhai-Macau Bridge. Both are expected to be officially rolled out this year.
“To fully capture the opportunities that will arise from such developments, the group has decided to reorganize its business proactively by closing its loss-making operations in Taiwan,” the company said.
While Sa Sa expects the store closures in Taiwan to result in a loss, it said the action will have limited impact on overall financial performance, as the affected stores only contribute about 2.5% of the company’s revenue.
Sa Sa has been a popular brand with mainland tourists to Hong Kong, who contribute roughly 60% of the group’s revenue in the city. But its sales slumped in the past two to three years, as wealthy mainland shoppers traveled further afield for more diverse experiences.
In the past few months, the company has recorded a robust performance in Hong Kong and Macau, thanks to the recovery in tourism. Sales in the two markets rose 8.1% to HK$1.89 billion in the quarter between October and December, compared with the same period last year.
Turnover in mainland China, Singapore and Malaysia increased 13%, 3.6% and 3.9% respectively during the period.