Giordano’s net profit for 2014 down 38 pct

Clothing retailer Giordano International Ltd. saw net profit for 2014 fall by 38.46 per cent to HK$408 million (US$52.6 million) on the back of a drop in group-wide sales, the company said in submitting its consolidated figures to the Hong Kong Stock Exchange yesterday. Giordano sales revenue declined by 5.18 per cent year-on-year to HK$5.55 billion for 2014, where a decline in retail sales is seen not only in Greater China but in the Middle East and the rest of Asia Pacific as well – including Singapore, Malaysia, Thailand and Australia. The results filed yesterday did not contain a separate breakdown for Giordano’s sales performance in Macau. But the company ran 79 sales outlets in Hong Kong and Macau in 2014, after the company had closed nine stores during the year. Giordano sales in Hong Kong and Macau declined by 6 per cent to HK$978 million in 2014, while its comparative same-store sales also declined by 5 per cent. The clothing retailer said that the sales decline reflected the change in the nature of visitors from Mainland China and hence a slowing down in the retail market of Hong Kong. Giordano’s operating profit in Hong Kong and Macau decreased by a year-on-year 48 per cent to HK$75 million last year. Accounting for the results in the Hong Kong and Macau segment, the company said ‘high upward rental pressure in prime locations’ has driven it to develop the weighting of the shop mix towards residential areas where sales densities are lower. ‘We believe this is a prudent strategy and are exiting unprofitable prime location shops where rent increases are excessive,’ Giordano noted in its Hong Kong and Macau segment results. ‘We expect rent pressure to ease during 2015 and will look to re-establish more prime locations when this happens,’ the filing read. Giordano’s retail revenue in Hong Kong and Taiwan, an important market for the clothing retailer, stood at HK$1.64 billion for 2014 and accounted for 31.5 per cent of the company’s total retail revenue at HK$5.2 billion. The company’s gross profit margin has also declined by 2.7 percentage points to 58 per cent, which it attributed to price discounting in markets where price competition was fierce and a rise in purchasing cost due to South East Asian currencies. S.L.