Giordano wants rents halved as losses hit $175m

Business | Winnie Lee 12 Aug 2020

Clothing retailer Giordano International (0709) reported an interim net loss of HK$175 million, compared to earnings of HK$161 million a year ago, due to a drastic drop in sales and provision for asset impairment.

Chairman and chief executive Peter Lau Kwok-kuen said the company may reduce the number of Hong Kong shops unless rents could be halved.

As of the end of June, the net loss generated in Hong Kong was HK$102 million. The impairment loss was HK$71 million.

The group declared an interim dividend of 3.1 HK cents, a year-on-year decrease of 70 percent.

Revenue was down 44.4 percent to HK$1.41 billion and gross profit margin slid 4.7 percentage points to 54.6 percent. However, online sales grew to HK$139 million, accounting for 9.8 percent of the total sales.

Sales in Hong Kong and Macau plunged 52.3 percent to HK$201 million, while mainland sales fell 43.5 percent to HK$299 million. In other Asia Pacific regions, the number was down 49.9 percent to HK$404 million.

Lau said landlords should cut rents by 50 to 60 percent for the company to survive, adding that it will expand in Singapore, Taiwan, and Thailand instead. Regions such as Taiwan, Korea and the mainland have recovered at a faster pace, Lau said.

Pessimistic about the Hong Kong retail market for the second half, he said Giordano may reduce the number of shops in Hong Kong if the operating environment continues to be difficult.

The company is moving its factories to Malaysia, Vietnam and Taiwan, with Lau saying that the group has cut 1,300 staff, mostly in the mainland.

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