About a year ago GK Goh said that clothing retailer Giordano was facing its brightest prospects for several years and was due to deliver a strong performance in 2004. It upgraded its recommendation from 'sell' to 'buy' and raised its target price to $6 from $4.925. Net profit in 2003 was down 22 per cent year on year to $266 million, which was better than expected. The group turned around strongly in the second half on improved merchandising and better consumer sentiment. Better procurement and inventory management helped to lift the gross margin from 46.7 per cent in 2002 to 48.2 per cent in 2003. Operating costs declined by 4 per cent year on year because of a 7 per cent drop in staff expenses and savings in distribution and administration. The broker raised its earnings estimates to $390 million for 2004 and $452 million for 2005. In August Giordano reported that interim profit jumped 171.42 per cent to $171 million for the six months to June last year, against $63 million during the same period of 2003 when its major markets were hit by Sars. Last month Giordano said 2004 profit rose 47.74 per cent, gaining for the first time in four years. Net income rose to $393 million, or 26.8 cents a share. Sales climbed to $4 billion from $3.4 billion. The counter closed on Friday at $5.25.