Slowing China demand eats into Giordano profit

Casual-wear retailer Giordano International said first-half net profit dropped 3 per cent as sales slowed, hit by softening demand on the mainland, its key market.

The company posted a net profit of HK$340 million in the January-June period, roughly in line with the consensus forecast of HK$348.5 million compiled by Bloomberg. It reported a HK$352 million net profit a year earlier.

"In the first half of 2013, we continued to see challenging market conditions across our global operations. Volatility in consumer demand has been significant in mainland China, Taiwan and Singapore and this has affected our sales," chairman Peter Lau Kwok-kuen said.

"Competition continues to be intense as international brands enter our major markets, putting pressure on costs. At the same time, local competitors are continuing to hold high inventory levels and cut prices."

Lau said the company was addressing sluggish mainland sales by developing fewer but stronger partnerships with authorised dealers, continuing store refurbishments to upgrade ambience and expanding on its womenswear, separate from the Giordano Ladies brand. It closed 64 outlets on the mainland this year.

The Hong Kong stores saw a modest gross profit increase of 3 per cent despite continued rental pressures while Taiwan suffered a 5 per cent decline, in line with a slowdown in its overall economy.