Giordano sales pushed down by weak China demand
Clothing company sees improvement after mainland gross profit drops 5 per cent amid 'intense' price competition
Casual clothing chain Giordano International posted a 1 per cent increase in annual revenue to HK$5.67 billion last year despite sales on the mainland and Taiwan declining amid weaker demand.
On the mainland, the company's revenue dropped 6 per cent year on year to HK$1.9 billion and gross profit fell 5 per cent to HK$1.07 billion.
The company's chairman, Peter Lau Kwok-kuen, said: "In the first two months this year, our sales situation has improved [on the mainland]. Gross profit margin has increased during the period."
However, Lau said he expected generally weak demand would only improve slowly and intense price competition was likely to remain for some time until excess inventory levels in the marketplace were reduced.
He said looking ahead, the mainland remained the company's key market and Giordano would expand its operations there as market demand started to recover.
Lau said he expected 80 new outlets for Giordano's female clothes line to be opened on the mainland this year.
The company, whose design centre in Dongguan now develops products directly aimed at the Chinese market, said Giordano would look for growth opportunities in third and fourth-tier cities on the mainland.
"Over the past 18 months, the consumption growth on the mainland has slowed down," Lau said. "I think the situation has stabilised over the recent half-year."
In Taiwan, revenue dropped 4 per cent to HK$732 million, after strong price-driven promotions to boost sales. In Hong Kong, the company achieved a 3 per cent increase in sales to HK$1 billion.
Robust growth in other markets was reported, particularly in Southeast Asia, offsetting the declining of sales on the mainland and in Taiwan. Revenue in both Indonesia and Thailand jumped 18 per cent year on year.
The company would keep looking for further global expansion, Lau said. It would also continue building its presence in India, where it runs 52 outlets.
Giordano acquired a controlling stake in Giordano franchisees in the United Arab Emirates and the Saudi Arabia in November, and it will open two shops in Botswana, southern Africa, next month.
Gross profit margin increased slightly, by 0.2 percentage point, to 58.7 per cent last year, while gross profit rose 1.5 per cent to HK$3.3 billion.
Net profit grew 13.5 per cent to HK$826 million from HK$728 million.
The company is proposing a final dividend of 25 HK cents per share, resulting in a full-year dividend of 40 HK cents, up 5.3 per cent compared with 2011.