Giordano plans to open fewer outlets
Casual wear retailer Giordano International plans to slow down expansion of its Asian retail network after sales suffered a high single-digit drop in the past two months.
The company aims to open 70 more outlets in Asia, including 40 in the mainland where it has 706 outlets. This compared with the 94 outlets opened last year.
Taiwan saw the biggest decline in sales since January, according to chairman and chief executive Peter Lau Kwok-kuen, because local banks have recently tightened credit-card limits.
'We expect the operating environment in Taiwan to be difficult this year. But this is the same for other players and we have no plans to close any outlets,' Mr Lau said yesterday after reporting a 4.9 per cent rise in net profit to $406 million for last year.
'By the time other players leave the Taiwan sector, we will open more stores to increase our market share,' he said.
Asia's 'unusual' warm weather and poor economic outlook amid high interest rates and oil prices also accounted for the drop in sales so far this year, the company said.
Mr Lau expected the mainland to remain the major growth driver.
The company aims to open more stores in northern China, with special focus on second-line cities such as Wuhan.
He said the company had been in talks with some mainland casual wear brands on acquisitions, 'but the prices they are asking are too high and unreasonable.'
Mr Lau said his company would not consider any deals that exceeded $1 billion.
In Hong Kong, the retailer will open two stores this year, one in Mongkok and the other at Chek Lap Kok airport.
Mr Lau said the company's Disney T-shirts, launched last year, had received 'very good response', and it would launch more designs this summer.
Turnover rose 10.2 per cent to $4.41 billion last year. Gross margin was 50.8 per cent last year, the same as in 2004. It recommended a final dividend of five cents per share and a special dividend of 15 cents. The company's stock yesterday rose 4.7 per cent to $4.45.