Hong Kong-based cosmetics retailer Sa Sa International Holdings Ltd (莎莎國際控股) on Wednesday announced that it plans to close all its retail stores in Taiwan by the end of the month, following six consecutive years of local operations recording losses.
Instead, the company has decided to concentrate its resources on markets in China, Hong Kong, Macau, Singapore and Malaysia, as well as its e-commerce business, Sa Sa said in a statement.
“The group’s performance in Taiwan has been persistently weak and the possibility of improvements is low into the foreseeable future,” Sa Sa chairman and chief executive officer Simon Kwok (郭少明) said in the statement.
For the 10 months until the end of last month, sales in Taiwan slid 11.5 percent year-on-year in New Taiwan dollar terms to HK$154.3 million (US$19.7 million), the company said.
The firm’s Taiwanese operation posted a loss of about HK$16 million last year, Yuanta Securities Investment Consulting Co (元大投顧) estimated.
“We believe the latest business decision was due to the division being lossmaking and the lack of a significant pickup in Chinese visitors to Taiwan,” Yuanta analyst Peter Chu (朱家傑) said in a note on Wednesday. “The Taiwan market exit could help improve Sa Sa’s overall business performance.”
Sa Sa said it made efforts to reorganize the management team in Taiwan, and took measures to enhance operational efficiency and reduce costs to narrow its losses, but the results were unsatisfactory.
The company said it expected better performance in markets such as China, Hong Kong and Macau, aided by infrastructure development projects and economic initiatives pursued by Beijing.
After careful consideration, the company would close all stores in Taiwan by March 31, it said.
Sa Sa, founded in 1978, entered the Taiwanese market in 1997 and opened stores in several major cities, including Taipei, Taoyuan, Taichung, Tainan and Kaohsiung, over the following years.
However, the firm’s local operations are relatively small compared with its more than 280 outlets across Asia.
As of Sept. 30 last year, the company had 21 stores in Taiwan, representing 7 percent of its total store network and contributing only 2.5 percent to overall sales, while the company employs about 260 in Taiwan, equivalent to 5.2 percent of its total workforce.
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