Mixed results for Giordano International
Hong Kong casual-apparel brand Giordano International has reported a small increase in sales for last year – and a dip in profit.
Group-wide sales reached HK$5.509 billion last year, up 1.8 per cent, with same-store sales down a marginal 0.1 per cent. Profit attributable to shareholders fell 4 per cent to $480 million.
In a stock exchange filing, Giordano International said sales from physical stores achieved a 1.7 per cent growth rate, while online sales – through its own sites and third-party platforms, grew by 1.3 per cent. Wholesale sales to its franchisees grew by 2.6 per cent.
By category, its best-performing sectors were childrenswear and womenswear, where sales for both rose by 6.9 per cent.
By geographical market, Giordano International delivered a mixture of results:
Mainland China: Business was affected by the Sino-US trade dispute and stock-market volatility, which negatively impacted on domestic retail sales. Comp-store sales slipped by 0.9 per cent.
Hong Kong and Macau: “Well-executed marketing programs, smart promotional activities and stringent cost control all helped achieve double-digit growth amidst complex macroeconomic conditions,” the company reported. “This market experienced a difficult retail landscape caused by an economic slowdown since the third quarter of the year. Severe typhoons and an abnormally warm winter also adversely affected its sales.”
Taiwan: Sales here rebounded to allow an operating profit increase of 34.9 per cent in the first half of last year, however the full-year change was a mere 2 per cent, due to the uncertainty created by the Sino-US trade dispute.
Vietnam: Giordano bought out its third-party retail operation in Vietnam and after improved sales and cost controls turned the business around. The market has grown to account for 5.6 per cent of Giordano international’s regional sales and operating profit rose.
Thailand: Operating profit from Thailand grew by 11.1 per cent, thanks to stable sales growth and an improvement in gross-profit margin.
Indonesia: In Southeast Asia, Indonesia stood out with a comp-store sales growth of 7 per cent for both Giordano and non-Giordano brands, and operating profit increased by 16 per cent.
Singapore: Operating profit decreased by 6 per cent as the business was adversely affected by an overall stagnant economy and lower tourist traffic.
Middle East: With consumers adapting to the newly introduced Value-Added Tax and changes in economic policies, comp-store sales fell by 7.3 per cent in the first quarter of last year. However, in the early weeks of this year, the company saw growth in comp-store sales of 4 per cent, prompting management to conclude that consumers have now adjusted to the tax changes and the retail industry there has stabilised.
South Korea: Net profit here increased by 6.7 per cent, attributable to better cost control, closure of non-performing stores and enhanced gross margin. Wholesale sales to South Korea increased by 10.5 per cent.