DEFYING the gloom, local clothing retailers are gearing up to increase their presence in Hong Kong and the region, cashing in on falling rental costs. Giordano International plans to open about 50 new outlets this year, after establishing the same number of shops last year, the company's executive director, Jimmy Chan Kui-tim, said. Mr Chan said the leases on about 18 Giordano shops in Hong Kong were due to expire this year. Some outlets might close, but new stores would open in better locations. 'There was a net increase of 50 new stores last year, and this year we will open at least 50 more,' Mr Chan said. Retail rentals have fallen at least 30 per cent, in some cases substantially more, and the company intends to benefit from the lower costs when leases expire. The company would also look to expand in the region, with emphasis on the markets of South Korea, Malaysia and the Philippines, as well as the mainland. 'Our profits in many of these markets, in local currency terms, have actually grown over the past year,' Mr Chan said. In dollar terms, income had fallen off to a degree. Another clothing retailer on the expansion trail is Esprit Holdings, which intends to launch a network of children's-ware shops across Hong Kong before July, to benefit from the lower rentals and a perceived lack of competition in the market for branded children's ware. Esprit executive director Surinder Chhibber said the five shops of 4,000 square foot to 5,000 sq ft shops would take a more value-for-money approach than the retailer's line of women's ware and would be in areas convenient to shopping mothers rather than in conventional prime retail sites. Outlets would also be opened in Singapore and Taiwan. Across Asia there would be up to 15 Esprit for Kids stores, representing a US$5 million investment for the company, majority owned by Michael Ying Lee-yuen. 'People are still buying kids clothes but, so far, our market share in that area is almost non-existent,' Mr Chhibber said. Esprit at present offers a small range of children's ware from its normal outlets. The shops, to be rolled out over the next 12 months, will target children from six months to 15 years and offer clothing and accessories similar to the Gap Kids franchise in the United States. Market watchers were mostly positive about Esprit's thrust into the children's market, despite the only moderate success rivals such as Giordano or U2 have had to date. One analyst said: 'This is a great opportunity to come in and grab market share. In the past, a lot of Asian families have not really focused on buying nice branded clothing for their kids, but with higher incomes that is changing.' Even if the children's-ware shops failed, they could be readily switched into conventional Esprit outlets, another analyst said. The market for branded children's ware is seen as a business suited to the warehouse-style outlet, where busy parents can one-stop shop. With cash reserves boosted by thriving operations in Europe, Taiwan and Australia, Esprit can be one of the few Hong Kong-based retailers to consider taking advantage of the local market doldrums. Last month, the company said interim profit attributable to shareholders had increased from HK$95.95 million to HK$163.8 million for the six months to the end of December, with the newly acquired European business showing 12 per cent earnings growth. Mr Chhibber had no illusions about the health of the local market, saying recovery signs were still 12 to 18 months away. 'The Hong Kong market is pretty tough, but we are not going to go into shrinking mode,' Mr Chhibber said. 'We want to position ourselves so that when the market turns we have a portfolio of good shops across Asia and we don't have to change anything.' He said rentals would continue to fall in Hong Kong, having already dropped as much as 30 per cent from last year's market peak. Mr Chhibber said Esprit was looking to establish a joint-venture partnership to help rescue the company's loss-making Korean operations. He said a number of potential partners were being examined and an arrangement was likely before the end of the year. Mr Chhibber said that, since December, Esprit had increased the number of outlets in South Korea from 30 to 35 and was likely to have 40 shops there by the end of the year.