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Homegrown casual wear brand Giordano's profits plunged in the first half as its clothing lines failed to impress shoppers and competition in women's wear intensified.
Net profit fell 49 per cent to HK$174 million from HK$340 million in the same period last year while global sales dropped 6 per cent to HK$2.7 billion.
The management, however, said the sales figure reflected the adverse impact of a weak Thai baht and Indonesian rupiah, and that excluding the currency impact, sales fell by 4 per cent.
"It varies from market to market," said chief executive Peter Lau Kwok-kuen.
"In Singapore, the sales drop was really substantial. The merchandise we brought into Singapore for last several seasons was a little bit too fancy for both men and women and we didn't have the basic polo and core T-shirts. That's been rectified and in the last couple of months, it's been going well.
"Overall, the women's line under the Giordano brand has dropped a lot more than men's. Obviously this reflects new competition - we've got a lot more women's brands than men's."
He added: "A lot of brands are trying to understand what the new women customers want today and we made the mistake of going after too many options and diluting what we're strong at: the newly defined basic work wear for women. We are seeing some signs of recovery."
The company implemented aggressive discounts to clear old merchandise and said it had seen substantial pickup in the second quarter and into August across several markets.
"The second quarter was very good in China. We're getting some traction on the strategies we're executing and there's a slight upturn in demand in some of our markets," chief financial officer Dominic Irwin said.
Founded in 1981 by media mogul Jimmy Lai Chee-ying, Giordano operates more than 2,500 stores across Hong Kong, mainland China, Macau, Taiwan, South Korea, Southeast Asia, Australia and the Middle East.
The group has been repositioning its main brand and experimenting with new labels.
It closed 112 Giordano stores on the mainland and focused on ending leases in venues that diluted its image such as supermarkets, replacing them with newly launched budget brand Beau Monde.
The group opened 11 Beau Monde stores in the second quarter, mostly in southern China. The management said it would fine-tune the brand and hopes to reach 100 shops by 2015.
It is also is testing out a new higher-end multi-brand store called Concepts, with one outlet in Macau. If successful, the company will roll it out to Hong Kong malls.
The management's outlook for the rest of the year is cautious due to a slowdown in spending on the mainland.
"It's going to be fairly painful for many retailers," Lau said. "On one hand, you're not riding on high growth anymore and number two, your operating costs have gone up due to the speculation and the hype in the last couple of years. They're likely to stay high for a number of quarters."
The company declared an interim dividend of 10.5 HK cents per share, a 34 per cent decrease from a year ago.
Shares of Giordano fell 2.13 per cent yesterday to HK$4.60.


Giordano net profit falls as clothing fails to impress

Founded in 1981 by media mogul Jimmy Lai Chee-ying, Giordano operates more than 2,500 stores across Hong Kong, mainland China, Macau, Taiwan, South Korea, Southeast Asia, Australia and the Middle East.

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Casual clothing company sees signs of recovery after modifying range amid declines in attributable income and sales in the first half


Homegrown casual wear brand Giordano's profits plunged in the first half as its clothing lines failed to impress shoppers and competition in women's wear intensified.


Giordano net profit falls as clothing fails to impress

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Casual clothing company sees signs of recovery after modifying range amid declines in attributable income and sales in the first half

Casual clothing company sees signs of recovery after modifying range amid declines in attributable income and sales in the first half