Two-pronged approach for Giordano Vietnam

Vietnam is on the radar for Hong Kong clothing retailer Giordano International, both as a market and supplier.

With its steady growth in the emerging market, the company is planning to establish a legal entity Giordano Vietnam.

It is also eyeing the country as a source market for product, while it continues to develop sourcing opportunities in Bangladesh.

While Giordano still sees opportunities for growth in developing markets such as Indonesia, Malaysia and Thailand, the company says in its annual review that those opportunities are fading.

Meanwhile, the group has plans to launch digital sales channels outside mainland China this year, initially through the development of its own eShops.

“Market conditions in Southeast Asia have been challenging in the past two years,” says the group, which improved its merchandising, and therefore profitability, in Singapore last year – “but this will be a tough market going forward”.

In the 2015 financial year, consolidated sales eased by 3 per cent – but increased by 1 per cent on a constant currency basis. Global brand sales were down 1 per cent for the year, but comparable same-store sales grew by 3 per cent.

As a strong Chinese New Year offset the impact of 81 store closures, brand sales in the first half of the year grew by 1 per cent. But in the second there was a 3 per cent drop because of unseasonably warm weather in Greater China.
Gross profit margin declined by 0.4 percentage points to 57.6 per cent, with higher purchasing costs caused by a strong US dollar eroding margins in Southeast Asia and Taiwan.
“Weak consumer demand in many markets has led to fierce competitive pressure on selling
prices,” says the group.

Nevertheless, in the second half of the year, improved purchasing and merchandising resulted in gross margin improving from 57.4 to 57.9 per cent.