Giordano International Limited and its subsidiaries reported group sales increase of 19 percent in its first six months ended 30th June, 2021.
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The Group reported sales for the first half of 2021 were US$215,993.2 (2020: US$181,557), representing an increase of 19.0 percent and due primarily to improved sales on the back of last year’s low base.
Gross margin grew by 2.4 percentage points to 57.0 percent (2020: 54.6 percent), attributable to fewer discounts. Operating expense recorded a further decrease of 2.9 percent, and was 54.1 percent of sales (2020: 66.3 percent).
Profit after income taxes attributable to the Company’s shareholders was US$7.7 million (2020: net loss of US$22.4 million). If excluding the net impairment provision for the right of-use assets and property, plant, and equipment, the net profit for the period would be US$7.9million (2020: net loss of US$13.3million). On 30th June, 2021, the cash and bank balances, net of bank loans, was US$119.7 million
(30th June, 2020: US$127 million).
Inventory turnover on cost decreased by 14 days to 124 days with increased sales and stable merchandise inventory balances. The merchandise inventory mainly comprises evergreen and in-season items. Basic earnings per share were US$0.49 (2020: basic loss per share of US$1.43).
The Board of Directors has declared an interim dividend of US$0.84 per share (2020: 0.4 per share) for the six months ended 30th June, 2021.
Dr. Peter Lau, Chairman and Chief Executive of Giordano, commented, “The business outlook remains uncertain as Covid-19 related lockdowns and movement control orders can still happen without warning. Therefore, it is difficult to predict the Group’s sales and profits for the second half of the year. Cash management is essential for long-term sustainability, which we will achieve through stringent cost control and working capital discipline. We will confidently respond to the challenges that lie ahead. Given most regions were profitable even under strict social control measures in the first half of the year, the sales and profit rebound will be promising once the lockdown and movement control ease.”
On the Group’s strategy moving forward, Dr. Lau pointed out, “Online business and emerging market expansion are our opportunities. Focusing on the local online businesses within our existing markets has so far proven to be successful. Our development in emerging markets is continuing. Nine franchised stores are now operating in Africa, almost doubled year on year. Our new franchisee in Central Asia has also planned to open stores in the second half of the year. Growth by franchising will remain our strategy in the new markets.”
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In conclusion, Dr. Lau emphasized, “In this challenging environment, Management will continue to strengthen our financial position, reduce overheads, enhance profitability and maintain a strong cash flow.”