Retailer's stock dives 11pc after Japanese group Fast Retailing drops plans to acquire a stake
Shares of Giordano International, which operates about 1,700 apparel shops in Asia, fell as much as 16.3 per cent at one point after Japan-listed Fast Retailing said it had dropped plans to acquire a stake in the clothing retailer.
Giordano shares closed yesterday at HK$4.03, down 11.23 per cent from HK$4.54 on Monday before Fast Retailing, which sells products under the Uniqlo brand, issued a statement saying it would not make an offer.
The shares, which had jumped almost 18 per cent to HK$4.80 on August 7 after it was disclosed that Fast Retailing had approached Giordano on a possible offer, fell to as low as HK$3.80 at one point yesterday. About 58.84 million shares changed hands compared with the daily traded average of 6.8 million shares in the past 12 months.
Fast Retailing, which has about US$1 billion cash on hand, has 30 Uniqlo stores overseas including seven in the mainland. Control of Giordano would have given it access to 714 more mainland outlets and about 100 in Hong Kong.
The Japanese retailer said on Monday night that 'Giordano's current share price is not truly reflective of the operational state and thus the inherent value of the company' as Giordano's first-half operating profit slumped 25.2 per cent to HK$184 million. Net profit fell 19.3 per cent to HK$151 million as sales declined about 6 per cent.
Giordano's management had also been 'reluctant to enter into any meaningful dialogue'. The Japanese company reserved the right to make or take part in an offer for Giordano's shares within six months 'if there is any material change in circumstance'.