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[Report: Asia Watch] 4 Strategies to Thrive in the Beauty Industry

Introduction

At the end of 2019, as people departed Singapore for their overseas end-of-year vacations, a Hong Kong beauty conglomerate was also getting ready to pull its operations from Singapore. On 2 December 2019, Sa Sa International Holdings issued a press release(1) announcing the closure of all 22 Sasa stores across Singapore.

The report notes that operational losses had been recorded from its Singaporean stores for the past six consecutive years, with turnover for Singapore operations at HK$99.4 million as of last year, following a 4.6% year-on-year decline.

While the release explicitly outlines that all the store closures are not expected to have any significant impact on international operations (“the Group operates a total of 265 stores, only 22 of them are located in Singapore”), a detailed examination into its business fundamentals and stock prices depict a declining long-term trend in the survivability of the business. In this article, Sasa’s business model and strategies are examined in relation to its performance, followed by an exploration of strategies that brands can adopt to survive and thrive in the increasingly competitive international beauty industry.

SaSa’s Corporate Background

Established in 1978, Sa Sa International Holdings is a leading cosmetics retailing conglomerate in Asia. It is listed on the Hong Kong Stock Exchange since 1997, and carries over 700 brands of beauty products in more than 260 stores across Asia. The Group focuses its operations mainly in Asia, with key consumer markets including consumers residing in Hong Kong, Macau, China, Singapore & Malaysia. Over the past few years, the Group’s performance has been on a steady decline from its 2013 heyday. Gross profit margins has halved from 10.8% in 2013 to 5.6% last year(2). Its stock price reached a high of 9.07 HKD in 2013, but has been on a steady decline ever since, with its price at 1.75 HKD at the time of writing, reflecting a 80.7% plummet in its price over half a decade.

In contrast to these downward trending numbers, the Group’s net assets rose from HKD 1.975 million in 2013 to HKD 2.486 million in 2019(3). This implies that while the company is investing in more assets in the hopes of securing increased revenue, customers are not responding favourably. As such, investors are also starting to cast doubts on the long-term prosperity of the business, therefore cashing out from the company.

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About the Author


Thaddeus Asher Han

Fashion Commentator & Creator
Fashion Journalist at Fashive
https://medium.com/@thaddeusasherhan


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