Low Q1 sales lead to gross profit decline at Giordano

Giordano International first quarter gross margin increased by 2.5 percentage points to 57.7 percent but gross profit decreased by 6 percent to 754 million Hong Kong dollars (97.1 million dollars) due to lower sales. Group sales for the quarter decreased 10 percent year on year to 1,306 million Hong Kong dollars (168.2 million dollars). The company said, weak currencies in South East Asian markets accounted for about 3 percent of the 10 percent decrease.

“The first quarter of 2016 has been challenging for Giordano, although our earlier anticipation of the adverse global market conditions and the strategic preparations that ensued have helped us to curb the impact and means we are still in a position to improve our performance to a satisfactory level later on in the year,” remarked Peter Lau, Chairman and Chief Executive of Giordano.

Global brand sales registered a decrease of 4 percent, attributed to improvements in franchisee performance in mainland China. Comparable store gross profit was up by 1 percent, despite a decrease of 2 percent in comparable store sales, due to improved gross margin. During the quarter, there was no net change in the number of outlets which was 2,372 at quarter-end.

“Going forward we will continue to pursue our gross margin strategy and continue to aim for operational excellence. We will continue to focus on our strategic markets of mainland China, the Middle East and other emerging markets to seek growth opportunities in a steadfast, yet prudent manner,” added Lau.

picture: giordano.com