Giordano's Semi Annual Profit Declines About 38%, And The Retail Environment Is Weak.

The clothing brand of Hong Kong is gradually lost in the clothing market, and when will it break through the trough?

In July 15th, Giordano international issued a profit warning. In the 6 months ended June 30, 2019, the group shareholders' profits should be reduced by about 38%.

In a notice issued by Giordano, it is estimated that the group may record a decrease of approximately 28% of its basic operating profit, or after the adoption of the new Hongkong Financial Reporting Standard No. sixteenth, which was adopted in January 1, 2019.

At the same time, the report pointed out that the decline in Giordano's profits mainly came from the Greater China region, mainly due to the weak retail environment and Sino US trade friction, which led to market sentiment in these regions.

In fact, Giordano's performance has been declining in recent years. Sales in the first quarter of 2019 amounted to HK $1 billion 299 million, down 10.8% from the previous year, while sales in the Greater China region dropped by 17.7%. Meanwhile, Giordano pointed out that sales fell due to warm weather and trade friction.

But is the weather and retail environment really weak?

Founded in 1981, Giordano, located in mid and low grade casual wear retail, was listed in Hongkong in 1991. In 1993, it entered the mainland market, opened a franchise store, and occupied most of the market in the clothing market. Giordano, which is developing rapidly, has entered Singapore, Malaysia, Burma, Thailand, New Zealand and other countries, and has established its own business. It was once called "GAP of Asia".

With the international fast fashion brands such as UNIQLO, Zara and H&M entering the Chinese market, Giordano has lost some of its popularity and its performance has gradually declined. In 2014 -2018, Giordano's revenue continued to show negative growth in the first three years. Even in the next two years, the growth rate was only below 5%.

Walking in big business circles and shopping mall is hard to see the figure of Giordano stores. Basically, all of them are UNIQLO, Zara and H&M. According to the data released by Giordano, there were 913 stores in the first quarter of 2019, compared with the 2000+ stores in the peak period, Giordano's development showed a difficult situation.

When Giordano released its performance, it had repeatedly said that the decline in its performance was more related to the retail environment and weather. In fact, if you walk into Giordano's store, you find that the fashion design has no characteristics and single style, and there is no tide flu. It's really the fashion mode of 70 and 80s. But now the consumer market has changed. After 90 and 00, young people have become dominant and demand has changed.

If Giordano continues to maintain its original brand positioning, the product is not personalized, fashionable and trendy. What is missing is not only the market, but also the possibility of being eliminated.

The decline in the clothing market is not just about Giordano, but also the brand of Hong Kong brands, such as Giordano, JEANSWEST, I.T and so on. Sales of I.T stores in Hongkong continued to decline; JEANSWEST's annual sales in 2017 declined and layoffs fell sharply; the performance of burshall continued to decline for a long time, and the development of every brand was telling about the gradual retreat of Hong Kong's clothing brands.

Even if the Hong Kong clothing brands strive to get their way in the market, they can harvest consumers' way through the customs shop and discount mode, and develop the three or four line market, but the results are very small.

Compared with Japan's UNIQLO brand, its performance has hit a new high in recent years. In the first three quarters of 2019, UNIQLO's total revenue reached 115 billion 708 million yuan, and the Greater China region became the most powerful brand in the global market.

UNIQLO was founded in 1984, also with the breath of the past era, but why can it achieve annual breakthroughs? First of all, UNIQLO is good at developing the basic models of the wild Joker, the classic look, and the fabric is very comfortable. Second, when UNIQLO develops products, it pays attention to the content of science and technology. Arise series, sunscreen clothes, fast drying clothes and so on will not ignore its fashion and will be very popular among the consumers. Third, UNIQLO knows very well the young consumers, and continues to launch the UT series with IP. Each series is very topic oriented and captive consumers with IP culture.

The domestic casual clothing brand persists in its own brand all year long, ignoring the needs of consumers, without product innovation, and can only go downhill step by step. The rise of the new generation of consumers, they have a new demand for fashion consumption and become increasingly fastidious about brands. The traditional clothing brands in Hongkong do not know how to innovate and can only be abandoned by these consumers.