【709 Business Results】Giordano earned 0.5% more last year, final dividend increased 6.7% to 6.4 cents　Middle East conflict raised logistics costs, but local business still grew　New Giordano Ladies outlet to open on Queen's Road Central in April

Giordano (00709) Announces that last year’s net profit was HKD 217 million, up 0.5% year-on-year; basic earnings per share were HKD 0.134, flat compared to the previous year; final dividend of HKD 0.064, up 6.67% year-on-year. Including an interim dividend of HKD 0.075, the total annual dividend is HKD 0.139, down 0.7% year-on-year, with a payout ratio of 108.5%. Giordano states that all markets have shown positive growth momentum since the beginning of this year. The company aims for core business revenue to grow by 3% to 5% this year, expecting profit growth to outpace revenue growth.

Middle East War Causes Logistics Costs to Rise by Up to 10%, but Limited Impact on Gross Margin

The Gulf Cooperation Council region accounts for about 20% of Giordano’s business, with approximately 144 stores. When asked about the impact of the Middle East war, Executive Director Chen Jiawei said that stores were slightly affected at the start of the conflict, but over the past one to two weeks, combined with the end of Ramadan, business has rebounded. Currently, stores are still operating normally, and no provisions have been made for the regional business.

He also mentioned that the increase in oil prices has affected costs, such as logistics costs rising by 5% to 10% compared to normal, but the overall gross margin impact is limited. Additionally, the company increased inventory days by 9 days in response to early Ramadan festive demand, so there is sufficient stock locally. The company is focusing on price management; if costs indeed increase, future price hikes are possible, but will depend on customer tolerance and maintaining gross profit margins.

Giordano CEO Colin Currie said that the first quarter of this year still saw growth in Middle Eastern business. The company will closely monitor the situation and maintain daily contact with the Middle Eastern operations team.

Last year, Giordano’s revenue declined 1.7% year-on-year to HKD 3.854 billion. The company stated that amid geopolitical uncertainties and macroeconomic challenges, core business revenue remained flat year-on-year. The performance this year was mainly affected by weak performance of non-Giordano brands in Indonesia; excluding these non-core brands, core business revenue remained stable year-on-year.

Southeast Asian Market Shows Improvement

The report indicates that most Southeast Asian markets performed better in the second half of last year, including Singapore, Malaysia, and Thailand, all recording stronger high-single-digit year-on-year growth compared to the first half. The Gulf Cooperation Council markets also maintained strong momentum, with better sales compared to the first half.

During the reporting period, Giordano’s e-commerce sales increased by 10%. Online sales in Mainland China and other regions (core business) grew by 9% and 25% year-on-year, respectively. This was driven by the “Digital First” strategy under the five-year “Beyond Limits” plan.

Online sales in Hong Kong and Macau rebounded strongly in the second half, with full-year online sales up 18.2% year-on-year. Additionally, e-commerce revenue in Southeast Asia and Australia (excluding Indonesia) grew significantly by 45%, further demonstrating the positive effects of the “Digital First” strategy.

The company’s gross margin improved notably in the second half, rising by 0.6 percentage points year-on-year, contrasting with a 3.3 percentage point decline in the first half. The full-year gross margin ultimately declined slightly by 1.2 percentage points; excluding the impact of non-Giordano brands in Indonesia, the decline narrows further to just 0.8 percentage points. The margin improvement was mainly due to effective price management and ongoing restructuring of procurement processes to reduce offshore costs.

Company to Reshape Core Brands

Management stated that 2025 is the first year of Giordano’s five-year “Beyond Limits” strategic plan. The company is restructuring operations and building capabilities and competitiveness around its four key strategies, laying the foundation for accelerated growth in 2026 and beyond.

They also indicated that 2026 will be a year of revitalization and growth, with plans to reshape Giordano Ladies and the core Giordano brand, including launching new logos, updating product lines, and introducing new store concepts. The new Giordano Ladies flagship store on Queen’s Road Central will debut in April. The core Giordano brand will be officially launched in the second half of the year. Through brand revitalization, Giordano aims to attract different generations of customers and further strengthen its positioning as a modern lifestyle apparel brand. Additionally, the successful launch of GC by Giordano last year will be expanded to more markets.

Giordano stores in Hong Kong will increase from 41 at the end of 2024 to 47-48 by the end of 2025, with about 30 stores being Giordano 1.0. Currie said that Giordano 2.0 will be launched in the second quarter of this year, starting in Hong Kong, aiming to enter regions and shopping centers where the brand has not yet established a presence, hoping to attract young consumers. The company did not disclose the number of new stores in Hong Kong, only stating that they will open if profitable.

Additionally, Chow Tai Fook’s agent reached a settlement with the Securities and Futures Commission regarding Giordano’s takeover offer and will pay shareholders up to HKD 1.5 billion. Executive Director Luo Xuewen said the matter is unrelated to the company and was only a platform for issuing announcements. He also expressed disappointment over the passing of one of the shareholders, David Webb, but has not contacted his family, and the claim process is ongoing.