Casual wear chain-store operator Giordano International saw its net earnings surge by 10.4 per cent in the six months ended June 30. This was despite nearly zero sales growth in its home market of Hong Kong. The result was in line with most analysts' expectations. It showed that net profit rose to HK$191 million from HK$173 million in the same period last year. Earnings per share were 13.3 HK cents. Turnover was up just 4.8 per cent to HK$1.74 billion from HK$1.66 billion previously. Taiwan remained the largest sales contributor for the group, generating turnover of HK$405 million. However, this was down 16 per cent from last year's HK$482 million, due to severe market conditions and a sliding currency, the company said. Hong Kong, where sales edged up 0.5 per cent to HK$382 million, was the market that was puzzling the company, chairman Peter Lau Kwok-kuen said. 'As the direction of the local economy's transformation is still a moot point, it is very difficult for us to see the market,' Mr Lau said. Comparatively, China continued to become the company's growth engine. Turnover in the mainland rose 17 per cent to HK$374 million. To capture the growing market, Giordano during the period added more than 100 distribution outlets in the mainland, bringing the total to 407. Mr Lau said the expansion was expected to be expedited in the coming year. In the next 12 months about 150 shops would be added in China under either the main brand Giordano, or secondary-lines such as Giordano Ladies and the newly established Blue Navy brand. The new brand, jointly operated by Giordano and the red chip China Resources, resembles Giordano's up and coming Bluestar Exchange brand which posted a 40 per cent sales growth in the first half. Other Giordano markets, such as Korea, Singapore, Philippines, Malaysia and Middle East had an aggregate turnover growth of 21.3 per cent in the first half. However, teething problems were seen in the newly established operation in Japan, a market to which the company returned in April after a previous failure in the early 1990s. Mr Lau said traffic in its 575 square metre store in Osaka's Universal Studio was lower than expected. Also, some items were found not to meet local preferences. 'But the problems will not discourage us from further expanding in Japan,' Mr Lau said. Giordano planned to open three more outlets in Japan by the end of the year. For the rest of the year, Mr Lau said: 'We have reason to believe there will be double-digit growth in the bottom line.' For the first half, the company declared an interim dividend of 4.5 HK cents.