Giordano's Gross Profit Margins Continue To Bear Pressure

Giordano, which is struggling to grow in the low-end apparel market, will have to lower its pricing again in order to find a change. Giordano said recently that the new brand Beau Bonde priced at 29-99 yuan will become the focus of its 2015 development. This also means that the high-end Giordano dream has been completely shattered and replaced by cheap routes. According to the insiders, the bottom line of pricing is bound to create greater pressure on the company's profits which are already in decline.

According to Yang Dayun, Cci Capital Ltd's CEO, Giordano 20 years ago, it was a high-end brand and famous brand in China, but now it is basically reduced to a low-end brand, and cheap positioning is prominent. Such a transformation is also widely questioned by the market.

According to the insiders, in the second tier cities that Giordano has focused on, the clothing market of 29-99 yuan is mainly in Shang Chao, and the products at this price are often labeled as "tail goods and quality general" labels, which are not attractive to consumers. "There is demand in the urban market, but the current situation is that with the pressure of local brands leaving the second tier, turning to the three or four tier cities, the urban market has already had the United States. Semir And other brand penetration, Giordano's advantage is not obvious. One industry insider said. It is not yet known whether the cheap strategy can be recognized by the market.

At the same time, the low gross profit caused by low price may also have an impact on the company's performance. Yang said that now Clothing enterprise The room for price reduction has been very small. He admitted that the gross margin and net profit margin of domestic clothing brands tend to be relatively large. "Some enterprises reported gross margin of 80%, but ultimately Net profit The rate may be only 9%, and the net profit margin that is generally reported about 50% gross profit margin will also be between 6%-9%. The gap is so large that the main reason is that the cost of circulation, retail tax and store rent are very high.

It can be seen that for Giordano, aiming at the original main brand three or four of the price product, it is bound to significantly reduce the gross profit margin and net profit of the enterprise. "Although rent and labor costs may be low, logistics and other costs are also unavoidable. The 29-99 yuan product is likely to run poorly." The above Chen insiders said.

In fact, even if the cheap brand has not yet formed a climate, Giordano Maori has been declining. According to the announcement, Giordano gross profit decreased by HK $337 million to HK $3 billion 214 million from HK $3 billion 551 million in 2013, and gross margin decreased by 2.7 percentage point to 58%.

Yang said: "money is invested, lack of publicity and so on. It is difficult to produce a brand with continuous profits. Facing the impact of fast fashion, it is still the original set, lack of essential innovation, and naturally become the most injured person.