Giordano Is Rather Pessimistic About Hongkong's Retail Market.

Giordano (00709-HK) released its interim results in 2029, with sales reduced by 11.1% to HK $2 billion 542 million. Shareholders of the company should account for HK $183 million in profits after income tax, and decrease by 28% annually. Gross margin remained basically unchanged at 59.3%; the number of days in which the cost of goods flows increased from 15 days to 92 days. The company said it was mainly due to lower sales and higher inventory in winter. As a result of the basic design, it could be launched again this winter. The company declared an interim dividend of 10.2 cents per share, with a dividend payout ratio of 100%.


For the retail performance in recent two months, Liu Guoquan, chairman and chief executive officer of the company, said that the Greater China region is the most important market due to problems such as Sino US trade friction. But the market in the Middle East, Indonesia and Thailand is better.


The company believes that due to continued Sino US trade disputes, social problems and the mainland's suspension of Taiwan's free trade in the second half of this year, it will adversely affect the regional retail industry and the global economic environment will become more uncertain. In response to such an environment, Giordano decided to strengthen cash flow management, including cost control methods such as freezing wages and staff numbers and reducing capital. "We will not lay off workers, but we will become more cautious in recruiting and increasing salaries. In the second half of the year, we will mainly adopt defensive strategies. In the current environment, we will not engage in unnecessary promotion activities, because they do not necessarily drive profits and increase costs, but 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," Liu Guoquan said.


On the rent side, Chen Jiawei, executive director and chief operating officer of the company, said that discussions were being made with the landlord about the reduction of rent. The owners' attitude had begun to soften.


Liu Guoquan admits that he has a more pessimistic attitude towards Hongkong's retail market. "After the more than ten years of abnormal growth, Hongkong's current view of Hongkong's retail industry will be pessimistic. The decline in the number of visitors to the mainland, the depreciation of the people's currency, and the shortening of the duration of the large-scale infrastructure construction will reduce the visitor's stay in Hongkong," which has a negative impact on the retail market in Hongkong. However, he also pointed out that Hongkong's retail industry also has some potential conditions to be optimistic, including how to innovate and transform the retail industry to increase its attractiveness. But when the optimistic environment is reflected, we need to rely on the industry again.