Giordano sales rebound, delivering first-half profit despite fewer stores

Hong Kong-listed apparel retailer Giordano is back in the black after first-half sales rose 19 percent against the prior year – including 44 percent in the second quarter.

Giordano, which now has 2094 stores across Southeast Asia, Greater China, and the Middle East, reported a post-tax profit of HKD60 million (US$7.71 million) for the half, in which its gross margin grew by 2.4 percentage points to 57 percent. The profit was a stark contrast to the Covid-impacted comparable period’s loss of HKD175 million ($22.5 million).

And despite ongoing disruption to sales in various markets, the company pared back its inventory turn from 138 days to 124.

The retailer closed a net 93 stores during the period, but its online sales soared 21.6 percent and now represent 10.1 percent of total group sales. Wholesale sales to franchises rose by 21.1 percent.

While the company incurred a loss in Hong Kong and Macau – where mainland tourists were effectively barred for the entire period – increased sales to local consumers, the closure of unprofitable stores and rent reductions helped lessen the impact.

“The average rental is still high despite gloomy consumer sentiment and the absence of incoming tourists,” said chairman and CEO Peter Lau in a results filing. “Management is continuing to negotiate with landlords for more affordable rental arrangements.”

However, sales in Mainland China delivered a double-digit increase despite fewer stores.

“Online sales and the franchising business continue to be our focus of development,” said Lau. “The online gross margin improved with increases in selling prices and fewer discounts.”