Salsa plans to cut 30 rents in the next year to reduce rent expenses and strive for survival

Financial News

Written by: Lin Leqian

2019-11-22 16:02

Social events continued, and the number of mainland tourists plummeted. Salsa (0178) recorded an interim result from profit to loss, recording a loss of $63.53 million and a profit of $203 million in the same period last year. The management said at the analyst meeting that it plans to close 30 Hong Kong stores in the coming year. The industry will mainly reduce rents by at least 50% before considering renewing leases and accelerating the establishment of additional stores in southern China.

A spokesperson for Sa Sa pointed out that, like Hong Kong's retail industry peers, it is being affected by an adverse market environment. Some owners have agreed to a short-term rent reduction at the request of the group, but the rent reduction is only a drop in the bucket. Due to the extremely difficult operating environment in Hong Kong, the Group is actively reducing rental expenses, including reducing the number of stores, and continuing to require owners to reduce rents in order to gain space for survival. Depending on the market conditions and the results of the rent reduction with the owners, the Group initially plans to reduce the number of stores by about 30 stores in the coming year and will be able to resume the profit contribution of the stores as soon as possible.

In addition, the Group hopes to work with its employees in the same boat, so it is actively taking measures to secure reasonable income for the Group and frontline employees who are paid by the commission system. At the same time, it will adjust the deployment of personnel according to business needs and strictly control the labor costs of various departments and frontline employees.

Same-store sales in Hong Kong and Macao fell 39.1% since October

Sasha mentioned in the interim report that social events in Hong Kong seriously affected tourism and business activities. In the third quarter from October 1 to November 18, retail sales and same-store sales in Hong Kong and Macau fell by 39.4% and 39.1% respectively. It is expected that the number of passengers in the golden season of Christmas and Lunar New Year may deteriorate further and it will be difficult to return to the original level in the short term.

The Group mentioned that due to the extremely difficult operating environment in Hong Kong, it will actively reduce rent expenses and require owners to reduce rents. Some street shop owners have agreed to reduce rents in the short term, but the current rent reduction is far from sufficient. They will also strictly control the cost. The actual remuneration of frontline staff will be reduced due to the decline in commissions. Some logisticians will take 2 to 4 days of unpaid leave every month from September and encourage employees to be as clear as possible.

As of the end of September this year, Sa Sa has approximately 4,500 employees, a decrease of 200 employees compared with the end of March this year. The staff cost during the period was 555 million yuan, more than double the $1.17 billion at the end of March. The number of Hong Kong and Macau stores remained at 118. .

Sasha was down 4.4% in the early days of Moto and Nomura

Sasha's intermediate eclipse 36.5 million yuan does not pay dividends from October to mid-month turnover fell 30%

Sa Sa's second-quarter Hong Kong sales plummeted 35.2%. Mainland passenger transactions fell sharply.

Salsa retail stock retail market