Dialogue Giordano Sales Growth In The First Half Of 9.24%, Foreign Business Continued Development

(00709) in 2018, the Hongkong interim results conference was held in 2018. According to the performance data released in the previous announcement, the company realized sales of HK $2 billion 860 million in the 6 months ended June 30, 2018, up 9.24% compared with the same period last year. The profit of the company's shareholders should be HK $254 million, an increase of 3.67% over the same period last year.

Sales growth was mainly due to the increase in commodity mix and average selling price. The revenue generated by group e-commerce was HK $163 million, the growth rate was 22.6%.

E-commerce sales in the mainland account for 89.6% of the group's e-commerce sales and 19.7% growth.

The sales volume of physical stores reached a steady growth of 8.8%.

Wholesale sales of franchisees increased by 6.9%, mainly from the mainland of China, and increased 19.6% to wholesale sales in the mainland of China.

core

Products account for 86.1% of all brand sales.

core

Maintain growth momentum, achieve comparable retail sales growth of 8.2% and compare gross margin growth by 6.9%.

The comprehensive marketing method of children's wear is continuous and effective, and the brand can achieve strong growth in comparison with the sales of the stores and the comparable market gross profit. The increase is 14.7% and 12.4% respectively.

The following is a question and answer record of Giordano international.

Q: store sales in Hongkong have declined. What kind of development plan will there be in the second half of the year?

A: in the first half of this year, the sales volume of Macao and Hong Kong stores grew by 5.6%, which is in line with market expectations.

Hongkong, Taiwan and Singapore belong to the developed market, so they will not expand significantly. The business strategy is to maintain the existing business. We believe that there will be more room for growth in developing countries, such as the three or four tier cities in the mainland, Malaysia and Indonesia.

In addition, the rent in Hongkong is irrational. The rent has increased in the past year and has a great impact on the retail industry.

However, the company will still look for opportunities to open stores in Hong Kong, but will not open stores on a large scale.

Q: there are many businesses overseas. Will the fluctuation of exchange rate affect income?

Answer: Yes.

However, there is no clear judgement of exchange rate fluctuations, nor can it accurately judge the impact on performance.

Q: how about the renewal of the shops in the first half? How much is the rent increase?

A: Hongkong usually signs a contract in three years, so now about 1/3 of Hongkong stores need to renew their rentals every year, and the rentals increase by about 10%.

Q: what kind of sales strategy will there be in the Sino US trade war? Will there be a price reduction strategy?

A: the Sino US trade war will be a blow to consumption and may not carry out more sales promotion activities. It will be controlled by cost control and inventory management.

Q: most of the company's products are purchased in the mainland. Will the depreciation of the RMB depreciate in the near future? Will the cost of future products drop? The specific reason for the gross profit margin falling by 0.6% in the first half?

A: for Hongkong, the depreciation of the RMB will lead to a decline in the cost of products.

Gross profit margin fell 0.6% in the first half of this year, mainly due to the extended product promotion period, and the low gross margin and wholesale electronic business accounted for the increase, dragging down the gross profit margin.

Q: at present, what is the proportion of children's clothing business? What kind of level is expected to develop? Will there be children's clothing store?

Answer: Children's clothing business accounts for about 6% of the total, compared with the past two years, there has been a marked improvement.

The company still has confidence in children's clothing business.

At present, children's wear is run by store store. In the future, children's clothing stores will be considered in China.

Q: is there a new retail store in Paris? Is there any plan to further expand the European market?

A: there are plans to open second more stores in Paris and will pilot Paris in the European market.

There are other plans to expand to Central Asia and South Africa, and expand by franchising. There will be no blind shop.

At the same time, it will expand wholesale business overseas, and think that retail risk is lower than itself.

Q: why does the Middle East business decline? Does the company plan to add 45 stores in 2018, will it speed up the opening up plan?

Answer:

Affected by the new sales tax, consumer sentiment has been suppressed and sales in the Middle East have declined.

However, three or four years ago, Malaysia had also dragged consumer sentiment on sales tax. The impact time was about 9-12 months. The company hoped that the negative effects could be dissipated in 9 to 12 months.

In the first half of this year, 25 stores opened in the mainland. New 40 to 50 new stores will be opened throughout the whole year, mainly in three or four line cities, where the cost of shops is low.

First tier cities tend to set up women's clothing brands with higher pricing and higher profitability.

Q: will the price be increased in the second half?

A: in the context of rising rental and labor costs,

The actual extent of a single case depends on the operation of different regions.