New | Giordano says net profit down 38 per cent
Homegrown casual wear brand Giordano International’s net profit fell 38 per cent for the year but the firm’s rebranding is beginning to take shape, management said yesterday, citing double-digit same-store sales growth in greater China in January and February.
Net profit for the year ended December was HK$408 million, beating the HK$404 million consensus forecast of 7 analysts compiled by Bloomberg, while global consolidated sales fell 5 per cent to HK$5.545 billion.
Profitability improved in the second half when same-store sales growth on the mainland and Taiwan returned to low digit growth, declining by 28 per cent compared to a decline of 49 per cent in the first half.
Overall same store sales for the retailer, which operates more than 2400 outlets across greater China, South Korea, Australia, Southeast Asia and the Middle East, grew by mid-single digits.
The group has been repositioning itself after the Giordano brand value became diluted, returning to more simple fashion basics while also testing new brand concepts.
It has closed 338 stores in mainland China over the last three years, focused on ending leases in venues that dragged down its image such as supermarkets, replacing them with their budget brand Beau Monde, and loss-making large format stores.
Management previously said they expected to expand the Beau Monde network to 100 stores by this year but Lau said yesterday they’d revised that number down to 80. There are 13 Beau Monde stores currently, all located within greater China. It is also testing out a new higher-end multi-brand store called Concepts, with one outlet in Macau.
Chief executive Peter Lau Kwok-kuen said they were easing landlords with the Beau Monde transition in lower quality Giordano store locations.
“They need to see that the clothing can sell in that location even with a lesser known brand,” Lau said adding that some of the less prime Giordano stores’ products were actually selling up to 50 per cent Beau Monde items.
“The Macau [Concepts] store was productive in the sense that it showed landlords what we can do. It shows that Giordano can be on an international level in terms of interior design,” Lau said.
The company declared a dividend of 25 HK cents per share. Shares of Giordano fell 3.36 per cent on Tuesday, ending at HK$3.74 while the market dropped 0.74 per cent.
