giordano international limited (stock code: 709) march 28th, 2008 (friday) 2007 annual results
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Giordano International Limited (stock code: 709)Giordano International Limited (stock code: 709)
March 28th, 2008 (Friday)March 28th, 2008 (Friday)
2007 Annual Results2007 Annual Results
Growth regaining momentumGrowth regaining momentum
March 28, 2008 Giordano 2007 Annual Results
(in HK$ millions) 20072007YOY
Change
Turnover 4,9504,950 + 13.2%
Retail & Distribution Turnover 4,4204,420 + 10.0%
Retail & Distribution Turnover in Mainland China 1,3491,349 + 23.8%
Gross profit 2,3572,357 + 8.2%
EBITDA 552552 + 7.6%
Operating profit 384384 + 2.1%
Profit attributable to shareholders 295295 + 43.9%
Earnings per share in HK cents 19.819.8 + 43.5%
Solid fundamentalsSolid fundamentals
March 28, 2008 Giordano 2007 Annual Results
(in HK$ millions) 20072007 2006
Net cash & bank balances on December 31 474474 665
Cash inflow from operating activities 343343 306
Inventory turnover on sales 33 days33 days 35 days
Current ratio 1.9x1.9x 2.1x
Gross margin 47.6%47.6% 49.8%
Retail & Distribution gross margin 50.6%50.6% 50.8%
Return on average total assets 10.3%10.3% 7.3%
Return on average shareholders’ equity 15.1%15.1% 10.0%
Balancing between current return for Balancing between current return for shareholders and investing for future growth shareholders and investing for future growth
March 28, 2008 Giordano 2007 Annual Results
(in HK$ millions) 20072007 2006
Final dividend (proposed) in HK cents 5.05.0 5.0
Special final dividend (proposed) in HK cents 10.010.0 15.0
Total interim dividend (paid) in HK cents 6.56.5 6.5
Total full year dividend in HK cents 21.521.5 26.5
Payout ratio 108.6%108.6% 192.0%
Capex expected to increase to between HK$250 million and HK$300 million in 2008 (2007: HK$142 million)• Plans to add 150 stores worldwide in 2008• New flagship stores coming in Hong Kong, Guangzhou, Hangzhou and elsewhere
Retail & Distribution Division driving growthRetail & Distribution Division driving growth
March 28, 2008 Giordano 2007 Annual Results
(in HK$ millions)Retail & Retail &
DistributionDistributionYOY
ChangeGarment Garment
ManufacturingManufacturingYOY
Change
Turnover (before intra-group elimination)
4,4204,420 + 10.0% 936936 - 2.1%
Gross margin 50.6%50.6% - 0.2% pt 12.8%12.8% - 1.4% pts
Operating profit 384384 +15.0% -- - 100.0%
Operating margin 8.7%8.7% + 0.4% pt -- - 4.4% pts
Better performance at the Group’s directly managed retail stores, reflecting consumer acceptance of our branding efforts• Comparable store sales increased by 2.4% (2006: down 3.0%)• Average selling price increased by 14.5% in 2007Garment Trading & Manufacturing Division becoming relatively less important• Decreasing share of Retail & Distribution purchases (16.2% in 2007 vs 25.7% in 2006)• Decreasing profit contribution
March 28, 2008 Giordano 2007 Annual Results
Giordano & Giordano Junior• 84% of 2007 turnover (2006: 87%) • Turnover up 5.7%• Comp store sales up 2.0%• ASP up 10.0%• Added 137 outlets in 2007
BSX / Bluestar Exchange• 6% of 2007 turnover (2006: 8%) • Converted 17 stores to BSX• Comp store sales up 12.1% and gross margin up 2.5% pts after conversion to BSX
• ASP up 13.2%
Giordano Concepts• 4% of 2007 turnover (2006: N/A)• Added 11 stores in 2007
Giordano Ladies• 6% of 2007 turnover (2006: 5%) • Turnover up 17.8%• Comp store sales up 9.1%• ASP up 11.0%• Gross margin up 1.0% pt• Added 8 stores in 2007
Retail & Distribution turnover by brandRetail & Distribution turnover by brandFor the Year Ended December 31, 2007
Retail & Distribution turnover by marketRetail & Distribution turnover by marketFor the Year Ended December 31, 2007
March 28, 2008 Giordano 2007 Annual Results
Mainland China• 31% of 2007 turnover (2006: 27%) • Turnover up 23.8% in 2007• 820 out of 1,895 stores worldwide
Hong Kong, 20% (22%)1
Taiwan, 15% (16%)1
Singapore, 9% (10%)1
Australia, 5% (6%)1
Indonesia, 4% (4%)1
Malaysia, 3% (3%)1
Thailand, 3% (2%)1
Others, 10% (10%)1
1 YOY figures in brackets
20072007 2006
Turnover (HK$M) 1,3491,349 1,090
Comp store sales + 15.2%+ 15.2% + 8.5%
Number of outlets 820820 729
• Six consecutive quarters of double-digit turnover growth since 3Q06
• Turnover growth accelerated to 23.8% (2006: up 10.4%) and comp store sales growth increased to 15.2% (2006: up 8.5%)
• ASP up 18.8% and gross margin expanded by 1.4% pts
• Operating profit increased by 81.7%
• 91 stores added in 2007, 72% of global store growth
• Turnover up 43.2% in first two months of 2008
March 28, 2008 Giordano 2007 Annual Results
MAINLAND CHINAMAINLAND CHINA AAggressively moving aheadggressively moving ahead
20072007 2006
Turnover (HK$M) 892892 873
Comp store sales + 8.1%+ 8.1% + 5.4%
Number of outlets 9292 98
• Total turnover increased by 2.2%
(2006: up 0.7%) and comp store sales incre
ased by 8.1% (2006: up 5.4%)
• Overall ASP up 20.6%
• Turnover of Giordano brands (Giordano,
Junior, Ladies and Concepts) up 7.0% and
comp store sales up 8.6%
• Turnover increased by 6.7% in first
two months of 2008 (Giordano brands
up 11.8%)
March 28, 2008 Giordano 2007 Annual Results
HONG KONGHONG KONG Steady growth in a challenging marketSteady growth in a challenging market
20072007 2006
Turnover (HK$M) 654654 658
Comp store sales - 4.2%- 4.2% - 9.1%
Number of outlets 210210 239
• Turnover stable (2006: down 10.1%)
• Comp store sales decline narrowed to 4.2%
(2006: down 9.1%)
• ASP up 11.2%
• 29 under-performing stores closed
• Turnover increased by 13.6% in first
two months of 2008
March 28, 2008 Giordano 2007 Annual Results
TAIWANTAIWAN Re-engineering operations for a turnaroundRe-engineering operations for a turnaround
20072007 2006
Turnover (HK$M) 390390 403
Comp store sales - 10.9%- 10.9% - 11.9%
Number of outlets 5353 53
• Turnover down 3.2% in 2007
• Experienced Hong Kong management
team brought in to reorganize operations
• Turnover decreased by 2.6% in the first tw
o months of 2008
March 28, 2008 Giordano 2007 Annual Results
SINGAPORESINGAPORE Reorganizing to improve operationsReorganizing to improve operations
20072007 2006
Turnover (HK$M) 982982 1,014
Comp store sales - 8.6%- 8.6% - 6.5%
Number of outlets 173173 148
• Better merchandising discipline helped
gross margin to increase by 2.4% pts
• Despite a 3.2% decrease in sales,
gross profit increased by 1.3%
• More stringent cost control helped
increase profit contribution to
HK$13 million from zero in 2006
• Turnover up 13.0% in first two months
of 2008
March 28, 2008 Giordano 2007 Annual Results
SOUTH KOREASOUTH KOREA Turning around and profitableTurning around and profitable
20072007 2006
Turnover (HK$M) 465465 359
Comp store sales + 10.9%+ 10.9% + 1.6%
Number of outlets 147147 131
• Turnover grew by 29.5% and comp store
sales increased by 10.9%
• Profit contribution increased by 50.0% to
HK$12 million
• 16 stores added in 2007
• Launched in Delhi and Mumbai in India
• Turnover increased by 11.8% in first
two months of 2008
March 28, 2008 Giordano 2007 Annual Results
MIDDLE EAST & INDIAMIDDLE EAST & INDIA Continued expansion in a buoyant marketContinued expansion in a buoyant market
March 28, 2008 Giordano 2007 Annual Results
Outlook – Sustain double-digit growth in 2008Outlook – Sustain double-digit growth in 2008• Group turnover increased 17.1% in first two months of 2008
• Plans to add 150 stores worldwide in 2008 – Capex expected to increase from HK$142 million in 2007 to between HK$250 million and
HK$300 million in 2008
• Continue to focus on rapid growth in Mainland China– Target to add 120 stores (all brands) in Mainland China in 2008– New flagship stores coming in Guangzhou and Hangzhou – Turnover grew by 43.2% in the first two months of 2008
• Faster growth for Giordano Ladies and Giordano Concepts– Target to add 30 Giordano Ladies and Giordano Concepts stores in 2008, mostly in
Mainland China– New flagship store coming in Hong Kong– Turnover increased by 29.9% in the first two months of 2008
• Closely monitor and support turnaround in Taiwan and South Korea– Taiwan sales increased by 13.6% in the first two months of 2008– South Korea sales up by 13.0% in the first two months of 2008
Giordano International Limited (stock code: 709)
Appendix Appendix
2007 Annual Results2007 Annual Results
March 28, 2008 Giordano 2007 Annual Results
3,389
4,003
4,413 4,372
4,950
3,000
3,500
4,000
4,500
5,000
5,500
2003 2004 2005 2006 2007
Turnover (HK$M)
488
636679
513552
0
200
400
600
800
2003 2004 2005 2006 2007
EBITDA (HK$M)
266
387 406
205
295
0
100
200
300
400
500
2003 2004 2005 2006 2007
Profit attributable to shareholders (HK$M)
2123
26.5 26.5
21.5
114%
86% 96%
192%
109%
0
5
10
15
20
25
30
2003 2004 2005 2006 2007
0%
40%
80%
120%
160%
200%
240%
DPS (HK cents) Payout ratio (%)
5-YEAR GROUP FINANCIAL HIGHLIGHTS5-YEAR GROUP FINANCIAL HIGHLIGHTS
No. of outlets
As at Dec 31, 2007As at
Dec 31, 2006
YOY ChangeGiordano
& JuniorGiordano Concepts
Giordano Ladies
BSX/Bluestar Exchange Others TotalTotal
Mainland China 774 4 15 27 - 820820 729 +91
Hong Kong 47 4 10 31 - 9292 98 -6
Taiwan 154 3 10 43 - 210210 239 -29
Singapore 50 1 2 - - 5353 53 -
Australia 59 - - 2 - 6161 59 +2
Malaysia 61 1 1 - - 6363 58 +5
Indonesia 81 1 1 7 2 9292 84 +8
Thailand 77 - - - - 7777 63 +14
South Korea 173 - - - - 173173 148 +25
Middle East & India 147 - - - - 147147 131 +16
Philippines 41 - - 3 - 4444 44 -
Japan 14 - - - - 1414 20 -6
Others 45 - - 4 - 4949 43 +6
Total 1,723 14 39 117 2 1,8951,895 1,769 +126
March 28, 2008 Giordano 2007 Annual Results
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