Giordano Shut Down 140 Stores To Prevent And Control The Epidemic, Shares Hit A New Low Of Nearly Four Years

Giordano is an enterprise mainly engaged in casual wear. Mainland China, Hongkong and Macao are important markets for Giordano. As of June 30, 2019, the income of mainland China, Hongkong and Macao reached 529 million yuan (HK $, the same below) and 421 million yuan respectively, accounting for 20.8% and 16.6% of the total revenue respectively.

In February 10, 2020, Giordano International announced that to prevent and control the epidemic, the company suspended 111 Giordano stores in 28 Giordano stores in Hubei and other provinces. By 11 February 11, 2020, Giordano's share price hit a four year low.

The company pointed out that during the lunar new year, sales of mainland stores fell by 57% compared with the same period last year, while Hong Kong and Macao fell by 61% compared with the same period last year. It is speculated that Giordano's performance in the first half of 2020 will be under pressure. In addition to the impact of the epidemic, Giordano's performance has also declined in recent years.

In the first half of 2019, the company's revenue was 2 billion 542 million yuan, down 11.12% compared to the same period last year, and its net profit to the parent company was 161 million yuan, down 36.61% compared with the same period last year. The reason is that with the impact of international fast fashion brands such as UNIQLO, ZARA and GAP, Giordano products that lack innovation and transformation are not keeping up with the trend of the market. It has great influence on the clothing brands of the main consumers, and with the influence of the electricity supplier business, the channel advantage of Giordano is not obvious, resulting in the decline of the company's performance.

In October 18, 2019, the company released the latest information of the unaudited business for the 3 months ended September 30, 2019. The company's sales in the 3 months of September 30, 2019 were 1 billion 75 million yuan, down 8.59% compared with the same period last year, and its income has improved in the first half of the year.

In the 3 months ended September 30, 2019, sales in mainland China, Hongkong and Macao fell by 208 million yuan and 169 million yuan, respectively, down 17.13% and 25.22% respectively. Among them, Hongkong and Macao in the third quarter of the decline rate is far higher than the first half, may be affected by the Hongkong incident, mainland tourists to enter Hongkong, making Hongkong's Giordano sales decline, the company is expected in the fourth quarter of 2019, Hongkong regional performance greater impact.

The 2020 Spring Festival epidemic is not the only reason why Giordano's share price has dropped. Giordano as a casual wear brand, with the impact of international fast fashion brands such as UNIQLO and ZARA, the products are more ordinary. With the Hongkong incident in the second half of 2019, Giordano has a great impact on sales in mainland China, Hongkong and Macao, and its performance in the first half of 2020 will be under pressure.

However, as the company's cash is relatively adequate, as of June 30, 2019, the company's cash and cash equivalents of 1 billion 265 million yuan, an increase of 1.28% over the same period, to support the company through the difficult period, if we strengthen the design and development team, Giordano also hope to enter the front end of the fast fashion brand.