Sars-hit Giordano expects earnings to slump
Giordano International expects a further decline in earnings following a 30 per cent drop in sales since the outbreak of Sars last month.
Chairman Peter Lau Kwok-kuen said sales in Hong Kong, southern China, Beijing and Singapore had suffered as fears of catching Sars in crowded places kept shoppers away.
'Our earnings this year [to December] will decline if the epidemic crisis becomes worse,' he said.
'But we cannot measure the size of the full impact now.'
Sales in southern China started to fall in February after a surge in the number of atypical pneumonia infections in Guangzhou. The impact extended to Hong Kong last month.
'Beijing's business started to turn sour after the announcement of the sacking of the city's mayor and health minister,' Mr Lau said after the company's annual general meeting.
Last year, the mainland market accounted for 24 per cent of the group's turnover of HK$3.58 billion, while Hong Kong contributed 21 per cent. Giordano has 1,256 stores worldwide, including 73 in Hong Kong and 532 in the mainland.
Yesterday, shares of Giordano at one stage fell to a 52-week low of HK$1.84 before closing at HK$1.86, down 3.12 per cent from Wednesday.
In a bid to cut operating costs, the company has asked its landlords for temporary rent reductions, suspended major acquisition plans and shortened the opening hours of some shops.
Meanwhile, the company expects to save about HK$1.7 million from the government's economic relief measures to help Sars-hit businesses.
'Although the amount of saving is not much, it is better than nothing,' Mr Lau said.
The company has no lay-off plans as its cash flow remains healthy with about HK$600 million in reserve, he said.
However, Mr Lau expects salary tax rebates of up to HK$3,000 to each taxpayer will boost consumer spending.
