Giordano Q1 profits fall 6% on low sales, shutters 5 stores
today May 5, 2016
Fashion retailer Giordano International saw first-quarter gross profits slide 6% compared to the same period last year. The Hong Kong firm attributed the profit drop to low sales, weak currencies and unseasonal weather.
Giordano's gross profit for the latest quarter slipped by 6% to HK$754 million (US$97.1 million), compared with HK$798 million for the same period last year. However, its gross margin increased 2.5% to 57.78%.
Gross profit in Hong Kong and Macau decreased by 5%, couple a sales dive of 7% across the two territories. Giordano shuttered five non-performing outlets in the Asian region, taking its store number to 71 outlets. Giordano advised some may be re-opened when Hong Kong rents reach a “reasonable level”.
Sales in China plummeted 12%, pushed by weak consumer confidence and cooler-than-usual spring weather. During the quarter, 10 franchised stores were added in line with the group’s strategic focus to develop its franchise network in third- and fourth-tier Chinese cities.
Sales in Taiwan were flat, while sales in Singapore skipped on by 1%. Sales in Indonesia grew 17% with five new outlets, sales in Thailand increased by 18%, and sales in Malaysia went down 5%, affected by the introduction of GST in April last year.
Giordano’s e-commerce business accounted for 10% of China’s brand sales during the quarter. It delivered a 34% gross profit growth compared to the same quarter last year.
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