International : Unaudited Sales Updates for the Second Quarter ended 30 September 2019

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SA SA INTERNATIONAL HOLDINGS LIMITED

莎莎國際控股有限公司

(Incorporated in Cayman Islands with limited liability)

(Stock Code: 178)

Unaudited Sales Updates

for the Second Quarter ended 30 September 2019

The board of directors of Sa Sa International Holdings Limited (the "Company") announces the unaudited sales update of the Company and its subsidiaries (the "Group") for the second quarter from 1 July to 30 September 2019.

	Highlights
	Group - Retail and Wholesale (Continuing operations)
			3 months ended
			30 September 2019
	Turnover (HK$ million)		1,610.2
	YoY % change		-20.8%
	HK and Macau - Retail and Wholesale
	Turnover (HK$ million)		1,309.5
	YoY% change		-24.1%
	Same store sales YoY % change		-28.5%
	Average sales per transaction (HK$)		326
	YoY % change		-5.4%
	Total no. of transactions (million)		3.9
	YoY % change		-21.9%

For the second quarter from 1 July to 30 September 2019, the Group's retail and wholesale turnover decreased by 20.8% on a year-on-year basis.

In Hong Kong and Macau markets, the retail and wholesale turnover decreased by 24.1%, while same store sales dropped by 28.5%. The decline was attributable to the decrease of 21.9% in total transaction volume, of which the number of transactions of mainland tourists substantially decreased by 37.7% and that of local customers dipped slightly by 1.7%. The average sales per transaction of local customers and mainland tourists increased by 2.2% and 3.3% respectively, however the change in the proportion of the customer mix led to a 5.4% decline in the overall average sales per transaction.

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In the Hong Kong market, the slump in tourist arrivals resulted in weak sales performance in the second quarter. Mainland tourist arrivals in Hong Kong started to report a negative growth on a year-on-year basis in July after 17 months of consecutive positive growth and this downward trend has continued to deteriorate. The high revenue contribution from mainland tourists led to a 35.2% decline in total sales in the second quarter. The transaction volume of mainland tourists significantly declined by 51.2% while that of local customers decreased by 3.0%. The reduction of opening hours at some of our stores have also contributed to the decline.

In view of the uncertain operating environment in Hong Kong, the Group has been proactively adopting different approaches to tackle the challenges. Store rental is one of the largest operating expenses and is also the Group's primary cost saving target. Some high street shop owners are willing to reduce their rents on a temporary basis during this difficult time. As shop level profitability is an important operating parameter, the Group will continuously review the market conditions and strive for the corresponding reduction in rentals based on the sales and profitability of each store. Reduction in store area or store relocation in neighbourhood areas may also be considered for lowering costs when appropriate. All these measures are intended to enable the Group to maintain competitiveness of its store network, preserve store level profitability, and above all, safeguard the livelihood of our staffs during this difficult period.

At the same time, the Group has been adopting prudent finance management approach by the implementation of a number of cost control initiatives, including optimisation of the operation procedure, proper management of human resources and reduction of all non-productive operational expenses. The Group also launched more discount offers to promote sales and actively improved inventory management. Although the gross profit margin may be depressed somewhat as a result, this will enable the Group to reduce inventory costs, preserve cash and manage overall business risks. Moreover, the Group is going to launch the WeChat mini- programme by the end of October, providing a seamless online-and-offline shopping experience for our customers. Frontline salespersons will then be able to continuously interact with the customers and sell products via this online platform, strengthening customer relationship and driving sales at the same time.

The Group's retail and wholesale turnover in other markets outside Hong Kong and Macau (including Mainland China, Singapore, Malaysia and e-commerce) decreased by 2.2% in the second quarter.

Number of Retail Outlets by Market (Continuing operations)

	As at 30 September	As at 30 June	As at 30 September
	2019	2019	2018
Hong Kong and Macau	118	117	120
Mainland China	46	52	54
Singapore	21	21	22
Malaysia	80	82	77
Total	265	272	273

Remarks: Figures in this announcement include adjustments in accordance with the Hong Kong International Financial Reporting Interpretation Committee - Interpretation 13 on the bonus point scheme.

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The board of directors wishes to remind shareholders and potential investors that the above information is based on the unaudited management accounts of the Group which have not been reviewed nor audited by the auditors of the Company. Sales performance during the period is affected by a series of factors; therefore, the operational information for the period may not be able to reflect the overall performance of a complete reporting period.

Shareholders and potential investors of the Company are cautioned not to unduly rely on such information and are advised to exercise caution when dealing in the shares of the Company.

By order of the board of directors

Sa Sa International Holdings Limited

KWOK Siu Ming Simon

Chairman and Chief Executive Officer

Hong Kong, 15 October 2019

As at the date of this announcement, the directors of the Company are:

Executive Directors

Dr KWOK Siu Ming Simon, SBS, JP (Chairman and Chief Executive Officer) Dr KWOK LAW Kwai Chun Eleanor, BBS, JP (Vice-chairman)

Dr LOOK Guy (Chief Financial Officer) Ms KWOK Sze Wai Melody

Non-executive Director

Ms LEE Yun Chun Marie-Christine

Independent non-executive Directors

Ms KI Man Fung Leonie, GBS, SBS, JP

Mr TAN Wee Seng

Mr CHAN Hiu Fung Nicholas, MH

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