Core Viewpoint - Sasa International, a Hong Kong beauty retail chain, is officially exiting the mainland China market by closing all offline stores by June 30, 2023, due to ineffective market coverage and a shift towards online sales, which account for 80% of its revenue in the region [1][2][3] Group 1: Company Performance - As of March 31, 2023, Sasa International reported a 9.7% year-on-year decline in total revenue to HKD 3.942 billion, with net profit dropping 65% to HKD 76.97 million [2] - The company's mainland China business saw a 10.5% decrease in revenue to HKD 521 million, resulting in a loss of HKD 44.95 million [2] - Sasa has estimated and accrued severance costs of HKD 17.224 million and compensation for early lease termination of HKD 3.01 million related to the closure of its mainland stores [2] Group 2: Market Dynamics - The beauty retail landscape in mainland China has changed significantly, with e-commerce becoming the primary sales channel and domestic brands gaining market share due to competitive pricing and innovation [4][5] - Sasa's offline store model failed to adapt to the e-commerce impact, leading to high operational costs and inefficiencies [4][5] - The company plans to focus on online platforms, having expanded its presence to seven major third-party platforms, including Kuaishou and Pinduoduo, in the 2024/25 fiscal year [5] Group 3: Strategic Focus - Sasa International aims to concentrate resources on the Hong Kong market, where over 80% of its sales are generated, and will continue to seek suitable locations for new stores in traditional tourist areas [3] - The company acknowledges the need for a digital transformation and intends to enhance its online operations while monitoring changes in the mainland market [3][4]