Salsa’s full-year net profit rose 7%

Sa Sa International (00178) announced its full-year results as of the end of March. During the period, its profit rose by 6.96% year-on-year to 471 million yuan; its earnings per share was 15.4 cents, and the final dividend was 9 cents per share, which was 2 cents per year. During the period, the turnover was 8.376 billion yuan, an increase of 4.47%; the turnover of the Hong Kong and Macau markets was 7.092 billion yuan, up 4.9%. Chairman Guo Shaoming acknowledged that the overall operating difficulties of the industry are currently difficult. Apart from the impact of the trade war and the depreciation of the Renminbi, the competition in the Mainland’s online stores is fierce and the gross profit of the company’s business is also under pressure.

Renminbi depreciation

As of the end of March, the company’s gross profit margin fell 1.3 percentage points to 40.8%. Guo Shaoming pointed out that there is pressure on the future gross profit margin, but still have to strive for and maintain passenger volume, the most important thing is to increase turnover; this year will continue to increase stores in Hong Kong and the Mainland. It is estimated that 7 to 8 stores will be opened in Tai Wan District and 3 to 4 shops will be added in Hong Kong. He revealed that the company still has room to open new stores in Hong Kong and plans to strengthen sales of healthy food. During the period, Salsa’s renewal rents only rose by 0.5%. Guo Shaoming explained that due to the poor retail market, street shop owners are willing to reduce rents. In the first quarter of the financial year, 18 stores have to be renewed, with rents falling by 19%. It includes the shops in the tourist area. As for the performance from April to June this year, the same store sales of Hong Kong and Macao business fell by 15%, and overall sales fell by 12%. The situation was worse than expected. The main reason was that the data in April was not satisfactory, but the situation in May and June has improved. The decline narrowed to the number of units.

In terms of performance, both the retail and same-store sales in the Hong Kong and Macau markets performed well in the first half of the year, recording double-digit gains, but affected by the Sino-US trade war, the depreciation of the Renminbi and other factors, coupled with the high base effect in the fourth quarter of last year, the second half of the year Same-store sales in Hong Kong and Macau rose only 7.3%, and same-store sales rose 3% throughout the year. The Group’s continuing retail outlets increased from 265 last year to 274. During the period, five new stores were opened in Dawan District and will continue to expand in the region in the future.

The total turnover and same-store sales in the Mainland decreased by 1.9% and 1.1% respectively year-on-year. For the loss of electronic commerce in the Mainland, Guo Shaoming said that the loss has narrowed in the second half.