Hong Kong’s biggest cosmetics retailer Sa Sa warns of record loss as coronavirus and protests reduce mainland shoppers to a trickle

Company could incur HK$500 million to HK$600 million loss in the year ended March 31, according to profit warning

Sa Sa’s retail sales in Macau and mainland China, e-commerce business were disrupted by pandemic and protests

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The queue of people, waiting in line for the opening of a pharmacy to buy surgical masks outside a shuttered Sasa outlet at Jardine's Bazaar in Hong Kong. Photo: Nora Tam

Published: 12:05pm, 6 May 2020Updated: 10:54pm, 6 May 2020

Hong Kong’s biggest cosmetics retailer Sa Sa International said it is preparing for its biggest ever annual loss as the coronavirus pandemic and anti-government protests reduced tourist arrivals to a trickle, damaging sales.

The beleaguered retailer said it could incur HK$500 million (US$64.5 million) to HK$600 million loss in the year ended March 31, according to a profit warning in an exchange filing late Tuesday, versus a HK$471 million profit a year earlier. It cited a decline in tourist arrivals from mainland China, whose spending power is cherished as the lifeblood of the local retail industry.

“Since the beginning of last July, the number of mainland tourists has declined significantly in Hong Kong due to the outbreak of social incidents,” the company said in the filing. “The number declined further after the outbreak of Covid-19 at the beginning of the year.”

A Sasa cosmetics shop shuts the gate while anti-government protesters stages a 'shopping' protest at the Landmark North shopping centre in Sheung Shui. Photo: Winson Wong

The viral outbreak has also caused foot traffic and retail sales to “fall significantly” in stores outside Hong Kong, including in Macau and mainland China, the company said. The retailer’s e-commerce business was also affected by a disruption in logistics services, it added.

The announcement suggests losses have accelerated in the second half, after it slipped into a loss of HK$34.9 million in the first six months through September 30 on a 16 per cent drop in sales. Data from the fourth quarter performance to March 31 showed sales in key markets plunged by 56 to 62 per cent as Hong Kong’s economy fell into a recession.