Giordano, a long-established clothing company, recently announced its results for the first half of 2020. While sales fell sharply, its net loss exceeded 150 million yuan. As a clothing brand remembered by those born in the 1970s and 1980s, Giordano’s performance has continued to decline in recent years, and its operations have declined. Under multiple blows, will Giordano still have a chance to turn around?
The performance report shows that affected by the new coronavirus epidemic, Giordano’s sales in the first half of the year Revenue fell 44.4% to 1.275 billion yuan; net profit fell sharply by 208.70%, with a net loss of 158 million yuan. From a channel perspective, Giordano’s online sales only increased by 5.3% to 125 million yuan, accounting for 9.8% of the group’s sales from 5.2% last year; however, affected by the epidemic, its store sales were almost halved, with 48.9% % decline.
As of the end of June this year, the company had a total of 2,187 stores. Giordano said that the company will boldly close underperforming stores in the future, while allocating more resources to online business and franchisee business, and preparing for a rebound in performance by accelerating digital transformation. At the same time, due to the slowdown in business in the Hong Kong market, the rental pressure on stores in the region is significantly higher than in other markets. If it cannot obtain substantial rental discounts in the future, Giordano will reduce its business in the Hong Kong market. In addition, Giordano stated that it will accelerate the development of overseas franchisees in the second half of this year, and at the same time develop online and offline channels in Kenya and Russia.
In response to the negative impact of the epidemic, in March this year, Giordano announced a collective salary cut for the management. The chairman and CEO would cut their salaries by 50%, and the executive directors would cut their salaries by 50%. and Hong Kong executives will have their salaries reduced by 30%, and other management members will have their salaries reduced by about 10%.
A reporter from China Business Daily noticed that before the epidemic, Giordano’s development was already in decline. In 2018, the company increased revenue without increasing profits. In the first half of last year, it was the first time that both revenue and net profit fell. Last year, the company’s revenue fell by 11.93% year-on-year, and its net profit fell by 52.08% year-on-year.
Giordano has been established for 29 years and was successfully listed in Hong Kong in 1991. As a clothing brand remembered by those born in the 1970s and 1980s, Giordano, Baleno and Bossini are known as the three giants of Hong Kong-owned clothing brands and have also caused a shopping craze in the mainland market. However, with the rise of casual clothing such as Metersbonwe and Semir, as well as the entry of international fast fashion brands, competition in my country’s clothing market has gradually intensified.
Wu Shaobo, an expert in the apparel industry, said in an interview with a reporter from China Business Daily that Giordano has gradually fallen behind in the increasingly fierce competition. The fundamental reason is that its brand is aging and its products are aging. Insufficient innovation, from leading the trend to catching up with the trend, and finally being forgotten by consumers. Wu Shaobo believes that in the context of the rapid development of the e-commerce industry, Giordano has been relatively slow to adjust its online and offline channel layout. Store sales alone are no longer able to meet the current shopping needs of consumers, and a serious shrinkage of the market is inevitable.
In order to expand market space, Giordano has shifted its development focus to overseas markets. In September last year, the company acquired the Middle East for US$2.65 million (approximately 18.4 million yuan). Market business. Wu Shaobo told reporters that betting on overseas markets is a high-risk attempt for Giordano. If it turns to develop overseas markets without fully realizing its own fundamental problems, it may fail. In addition, the current overseas market is still facing many uncertain factors, and it is difficult for Giordano to improve its performance through overseas markets.
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