In the third quarter of fiscal 2024, SaSa, a prominent Hong Kong-based beauty retailer, reported an unaudited sales update reflecting a mix of improvements and ongoing challenges. The company's turnover for the three months ending December 31, 2024, stood at HK$1,055.1 million, marking a decline of 10.7% compared to the previous year. While offline sales showed a more moderate decrease of 7.9%, this was a marked improvement from the first half, driven by increasing tourist arrivals from mainland China. However, online sales experienced a significant drop of 22.3%, primarily due to economic conditions in mainland China. Despite these setbacks, there were positive signs, especially with e-commerce growth in Southeast Asia.

Offline Sales Show Signs of Recovery

The beauty retailer noted that its offline sales performance improved significantly compared to the first half of the fiscal year. A key factor behind this improvement was the resurgence of tourists from mainland China, which helped mitigate some of the earlier losses. Although offline sales still decreased by 7.9% year-over-year, this decline was less severe than previously observed. The company attributed this positive trend to the gradual recovery of the tourism sector, which is crucial for its brick-and-mortar stores in Hong Kong and Macau.

Despite the overall decline in offline sales, the impact of reduced investments in mainland China was notable. SaSa decided to scale back its offline presence in the region, leading to a substantial 38.7% year-over-year decrease in offline sales. This strategic move aimed to focus resources on more promising markets. Moreover, the introduction of the 'one visa, multiple entries' policy in December is expected to provide a further boost to tourist traffic, gradually enhancing sales performance. The company remains optimistic about the long-term benefits of this policy, anticipating sustained improvements as it takes full effect.

Online Sales Face Economic Headwinds but Show Regional Strengths

The digital segment faced considerable challenges during the quarter, with overall online sales dropping by 22.3%. The primary reason for this decline was the sluggish economic environment in mainland China, which affected consumer spending. However, not all regions experienced the same downturn. Online sales in Hong Kong and Macau remained stable, indicating resilience in these markets. Additionally, e-commerce in Southeast Asia saw a robust 12.9% growth, highlighting the potential of expanding into emerging markets.

The economic slowdown in mainland China had a profound impact on SaSa's online business. Consumer confidence and disposable income levels in the region were lower, resulting in reduced online purchases. Nonetheless, the stability of online sales in Hong Kong and Macau suggests that local demand remains strong. Furthermore, the impressive growth in Southeast Asia underscores the importance of diversifying the company's market presence. By capitalizing on the growing e-commerce trends in this region, SaSa can offset some of the losses incurred in other areas. The company is exploring opportunities to enhance its online offerings and expand its reach, positioning itself for future success in a rapidly evolving retail landscape.