Performance Report: There Will Be Ups And Downs In The Second Half Of The Year, Which Will Continue To Control Cost.

On Thursday (August 8th), Giordano International Ltd (00709) held the 2019 mid term performance report in Hongkong. Company chairman and executive director Liu Guoquan, executive director and chief operating officer Chen Jiawei, executive director Luo Xuewen, financial supervision building, Min Min attended the meeting.

At the meeting, the second floor of the financial supervision department made a brief exposition of the company's first half performance. In the six months ended June 30, 2019, the company's sales volume was HK $2 billion 542 million, down 11.1% from the same period last year. The comparable sales and comparable gross margins of the company decreased by 8.6% and 8.9% respectively. During the reporting period, Sino US relations and abnormal warm winter had a negative impact on the company's sales.

In the first half of the year, the profit attributable to shareholders of the company was HK $161 million, down 36.6% from the same period last year. The decrease in profit attributable to shareholders is mainly attributable to reduced sales and the adoption of additional account costs of HK $22 million arising from the Hongkong financial reporting standards lease sixteenth. If we adopt the previous accounting standards, the company should report that the profit attributable to shareholders in 2019 was HK $183 million, a decrease of 28% compared with the same period in 2018.

The company adopted the Hongkong Financial Reporting Standard No. sixteenth from the financial period of January 1, 2019. In accordance with the transitional provisions of the code, the company has not restated the profit attributable to shareholders in the same period of 2018 as set forth in Hongkong Financial Reporting Standard No. sixteenth.

In the first half of the year, the revenue generated by e-commerce decreased by 19%. Store sales fell 8.9%. Core Giordano products account for 85.2% of total brand sales. All products experienced varying degrees of sales reduction during the period. The sales of high-end women's clothing brand Giordano Ladies decreased slightly by 2.7%, mainly in the Greater China region. The rest of the Asia Pacific region will grow in sales, and the company will continue to expand in the region.

In addition, due to the decrease in sales and the higher inventory in the winter, the number of days of inventory turnover increased by 15 days to 92 days. This is the basic design and will be launched again this winter.

Liu Guoquan, chairman of the company, said at the meeting that in view of the global economic slowdown, the company was vigilant in controlling its operating expenses. In the second half of the year, there are still some unfavorable factors in the external environment, business or ups and downs, the company will continue to enhance competitiveness, so that the cost of products and operating costs will be rationalized.

The following is a record of Giordano International Ltd performance meeting of Zhitong finance APP.

Q: if the current situation in Hongkong continues, does the company have any plans to close some stores? If so, which areas will be implemented? Then, will the company take some measures such as price reduction and promotion to stimulate sales growth?

Answer: the company has no plans to close the store. As a matter of fact, we have a newly renovated new shop opening next week. As for the problem of stimulating sales, we mainly adopt defensive strategy, because we will not see a good situation in the near future, so we do not need to make some unnecessary promotion. This will only have an impact on profits, and at the same time, it will not reduce costs.

Q: how does the company look at the cautious attitude towards consumption in 7 and August? The company said that there are not many favorable factors in the second half of the year, so how will the gross margin level in the second half of this year be guaranteed to be in line with that in the first half of the year?

A: China and the United States have some problems. The Greater China region is the most important market. But the Middle East, Indonesia and Thailand have a better market performance, which can compensate for the decline in the Greater China region. We believe that the gross profit margin in the second half of this year can be maintained at the same level in the first half of the year. The consumption of Hongkong in the whole 7 and August is affected in all industries. We mainly do our part well and adopt a defensive strategy. The issue of cost control is not just in Hongkong, but in all parts of the world where our business is concerned. We will not lay off workers, but will become more prudent in recruiting and increasing salaries. Employees' pay increases will be determined according to their performance rather than a general salary increase plan as before. In addition, rent control will be involved in cost control. We are now discussing with the landlord about reducing rent. We have seen that the attitude of the owners has begun to soften. We hope that we can get the main body of the business.

Q: in the first half of the year, the company's e-commerce business has declined. Will it increase investment or expand the proportion of e-commerce business in the future? In view of the retail association's estimate that the number of retail data in the second half of this year will decline in double digits, will the development of the electricity supplier part of the development of some of the shops drop the impact?

Answer: about the electricity business, we haven't done much in the past. But in the past two years, we have speeded up the speed of development in this electricity supplier, and the electricity business in the mainland has declined. In addition, the performance of other regions, in fact, I am skeptical about the fact that the electricity supplier can compensate the entity store down. As for expanding investment, there are two aspects. First, we will not adopt our own platform. We will take advantage of the third party platform in terms of manpower and material resources. The second is that we will increase investment in logistics. Because the three most important elements of the electricity supplier are speed, price and quality. Therefore, we have invested some mechanical equipment in warehouses and logistics in Hongkong and the mainland to help us improve efficiency.