Giordano International Limited · HKEX:709
Giordano International — Investor Day (August 2024)
40 slides from Giordano International's investor day presentation, Aug 15, 2024
Slide 1: Giordano Beyond Boundaries & 5 Year Strategy
Giordano Beyond Boundaries & 5 Year Strategy Investor & Analyst Day 15 Aug 2024
Slide 2: Agenda
Agenda Beyond Boundaries Colin Currie 1st Half Results Dr. Gary Chan Closing Colin Currie Q&A All 2
Slide 3: Beyond Boundaries Strategy 2030
BEYOND BOUNDARIES STRATEGY 2030 COLIN CURRIE CEO 3
Slide 4: CEO Report: First Days
CEO Report 08 First 100 Days DEEP UNDERSTANDING THROUGH 12 66 5 Market Visits across Greater China, South East Asia, Gulf Cooperation Council and Store visits Year Strategy developed South Korea 36 Monthly Business Reviews with Markets 1:1 Touch base with Top 50 Senior Leaders Completed In Progress
Slide 5: We have the DNA for growth
We have the DNA for growth Strong Fundamentals GP % ~58% Robust cash position PATS Margin ~8.9% (in 2023) Strong Brand Recognition & Heritage Over 30 countries with 8 million loyal customers, especially strong in Hong Kong & Southern China Dedicated Staff Talented and committed staff to drive change
Slide 6: Macro events as backdrop to declining business, time to reset and win
A series of macro events as a backdrop to our declining business, time to reset and win From our peak to now Time to reset, Peak Profit HK Social Events recalibrate and win HK$5.8bn revenue, Through quick wins and our 5 solidifying Giordano’s strong Direct impact to HK business year strategy positio
Slide 7: Giordano business shrunk by 1/3 over past 10 years
Giordano business shrunk by 1/3 over past 10 years Giordano Global revenue and operating profit margin 2013-2023, HKD million, % OP 828 542 556 568 689 625 397 -105 263 425 503 OP% 14.2% 9.8% 10.3% 11.0% 12.7% 11.3% 8.2% -3.4% 7.8% 11.2% 13.0% -34% 6,000 5,848 5,545 5,381 5,412 5,509 5,145 Covid out
Slide 8: Mainland China business shows a 62% drop in revenue
China A deeper look into our Mainland China business shows a 62% drop in revenue over past 10 years 8
Slide 9: P&L Overview – First Half 2024
Financial Highlights P&L Overview – First Half 2024 Group Revenue Southeast Asia and OPEX up 2.9% Net Profit Interim 8.0 was flat yoy, Australia +6.7% $120m dividend of cents constant exchange to 49.5% Per share rate Gulf Cooperation (vs. 2023 $190m) due to due to one off expenses Council +0.6% rela
Slide 10: Quick Win initiatives to drive growth
Immediate Priorities 2024 Quick Win Drive initiatives to Competencies & Capabilities Focus on our drive growth People and optimize profitability 10
Slide 11: Quick wins to accelerate growth
Quick wins Quarter 2 to accelerate growth WIP WIP WIP Store eCommerce Go-To-Market Product Storytelling on Inventory Operations Acceleration SS’25 Allocation Product Management Improvement Innovation 11
Slide 12: 2024 will be a Transition Year
Outlook Positive growth in 2nd Half 2024 2024 will be a Transition Full Year flat to 2023 in revenue Year 12
Slide 13: Time for Giordano to transform into a growth company
It is time for Giordano to transform itself into a growth company 13
Slide 14: Our 5 Year Strategy Beyond Boundaries
Our 5 Year Strategy Beyond Boundaries 14
Slide 15: We are in an attractive industry
We are in an attractive industry Sound economics Growth opportunities Large market Healthy profit margin In Greater China Apparel industry Robust growth growth across markets in eCommerce Long term Casual healthy shareholder dividend Lifestyle trends 15
Slide 16: Vision, mission, corporate values
In Phase 2030 1, we mission, Vision, leveraged 3corporate sources of values inputs to support our diagnosis… To be the best Asian apparel brand To make people "Feel Good" and " Look Great" Updating expertise and Exceeding customer's Doing things right Thinking out of the box Less is more sharing kno
Slide 17: Strategic Choices
Strategic Choices Brand Digital Greater One Portfolio First China Giordano Men, Women, Junior • Revitalize • Digital Transformation • Mainland China • Centralized HQ Giordano • eCom Acceleration Brand revitalisation Functions • Beau Monde by • Digital First • Winning in Hong • Marketing & Brand Gior
Slide 18: We will simplify our brand portfolio
WE WILL SIMPLIFY OUR BRAND From 5Brands To 3 Brands PORTFOLIO Giordano Men TO BE Giordano Friendly Trendy Everyday Comfort CONSUMER Giordano Women Brand Women Skewed Male Skewed CENTRIC Men, Women, Juniors Age 18-27 Age 28-34 Giordano Junior Giordano Ladies Giordano Ladies Premium Elegance Beau Mond
Slide 19: Rejuvenation of Mainland China and Hong Kong is key to turnaround
Rejuvenation of Mainland China and Hong Kong is key to our turnaround strategy Market Size '23-'30 (HKD Bn) CAGR ‘23 ‘30 China 2,430 3,084 4% Greater Hong Kong3 31 79 7% China Taiwan 72 94 4% Australia 118 154 4% Cambodia 4 6 7% Southeast Indonesia 64 200 7% Asia & Malaysia 46 73 7% Australia Singap
Slide 20: Portfolio strategy required to fuel growth across the group
Portfolio strategy required to fuel growth across the group Market clusters High Growth Engine • Ambition: Gain market share • Strategy: Invest to accelerate growth and outgrow competitors • Op model: Self-owned countries; leverage franchise for scale within markets Revitalization Revitalization Gro
Slide 21: ML China is a 'Must-win battlefield'
China ML China is a 'Must-win battlefield' representing the biggest profit upside and revenue size Size of '30 Revenue High China Indonesia Hong Kong UAE "Must-win battlefield" '24-'30 South Korea Saudi Incremental Sing- Arabia Operating apore Mala- Profit ysia Taiwan Thai- land Whole- India sale Ku
Slide 22: Our new strategy in a snapshot
Our new strategy in a snapshot Beyond Boundaries Customer Innovation 22 22
Slide 23: 5 Year Strategy – Consumer Centric Approach
5 Year Strategy – Consumer Centric Approach REVITALIZE & RECONNECT RESET RECALIBRATE 2025 2026-2027 2027+ Enhancing Fundamentals Revitalize the brand portfolio Regain our position in Strengthening our Go-To-Market Greater China (ML China Deliver great & quality Strategy + HK) products to d
Slide 24: Giordano Global 2030 Strategy House
Giordano Global 2030 Strategy House - Beyond Boundaries 2030 Financial ambition Giordano Main Giordano New Giordano Ladies Other brands Role of market Market Key initiatives Hong Kong Core business • Product innovation New engine Full Potential Growth • Product mgmt. optimization 4 Indonesia Double
Slide 25: Beyond Boundaries is a growth & investment strategy
Beyond Boundaries is a growth & investment strategy OUR AMBITIONS FOR 2024 2024 PROFIT AFTER TAX NET SALES GROWTH Strive to achieve revenue at a high Endeavour to achieve profit after single to low double-digit tax margins trending towards compound annual growth rate historic levels (CAGR) 25
Slide 26: Overview
Overview • Group revenue was flat at constant exchange rates. At current rates, revenue -3.4% to HK$1,903 million (1H23: HK$1,970 million) Global store count -24 to 1,774 (1H23: 1,798) Group same-store sales -1.4% • Gross margin +0.2pp to 58.9% (1H23: 58.7%) Retail gross margin -0.5pp to 60.7%
Slide 27: Revenue by market
Revenue by market -3.4% to HK$1,903 million (1H23: HK$1,970 million) (In HK$ million) At constant exchange rates 2,000 18.3% 19.0% Gulf • Group revenue was flat 1,800 Gulf Cooperation Cooperation Council • Greater China -5.1% 1,600 Council • Southeast Asia and Australia +6.7% 1,400 37.3% 38.9% South
Slide 28: Revenue by channel
Revenue by channel (In HK$ million) 2000 11.1% Offline -2.9% 1800 10.4% Wholesale Wholesale Mainland China -26.5% lack of brand 11.7% 11.4% 1600 Online investment Online Group same-store sales -2.0% 1400 Online -0.9% 1200 Mainland China +1.7% at constant exchange 1000 rates 800 77.5% 77.9%
Slide 29: Gross profit
Gross profit • Gross profit -3.1% YOY; gross margin +0.2pp to 58.9% (1H23: 58.7%) • Higher selling prices could not mitigate the volume drop and product costs increase • Unfavourable currency impact 1H23 Currency 1H24 gross Product Selling translation gross (In HK$ million) profit costs prices Volum
Slide 30: Operating expense
Operating expense • Operating expense-to-revenue ratio +2.9pp • Mainly due to the former CEO’s severance package and legal expenditure OPEX to sales (%) (In HK$ million) 60.0% 1H23: 46.6% 1H24: 49.5% 600 50.4% 51.3% 47.6% 47.8% 50.0% 46.3% 46.6% 46.6% 45.6% 500 6.7% 5.3% 6.4% 5.4% 5.9% 40.0% 5.8% 6.
Slide 31: Changes in PATS
Changes in PATS Net margin -3.3pp to 6.3% (1H23: 9.6%) (In HK$ million) PATS for the six months ended June 30, 2023 190 Wholesale to overseas franchisees/subsidiaries 7 Gulf Cooperation Council 1 Southeast Asia and Australia (5) South Korea (14) Greater China (39) Headquarter expenses, finance expen
Slide 32: Market update: Greater China
Market update: Greater China Mainland China • Offline -26.5% with comparable store sales -15.9% (In HK$ million) Revenue Diminishing brand perception and awareness High-aged inventory 1,000 Cost cutting measures Disconnected our brand from customers 900 Quick Win Centred around store operation
Slide 33: Market update: Southeast Asia and Australia
Market update: Southeast Asia and Australia (In HK$ million) Revenue 800 Others 12 Others 13 700 Vietnam 34 Vietnam 37 Singapore Singapore 100 91 600 Malaysia Malaysia Indonesia and Singapore 500 84 94 • Robust growth Thailand 127 Thailand • Effective local marketing initiatives 400 139 Thailand and
Slide 34: Market update: Gulf Cooperation Council
Market update: Gulf Cooperation Council (In HK$ million) 1H24 1H23 Revenue 362 361 Franchised stores 41 38 Direct-operated stores 138 134 Store Store at at year-end period-end 179 172 • Continued exhibit growth even though geopolitical tensions continued to impact the market’s macroeconomic environm
Slide 35: Inventories
Inventories • Group inventories +2.6% YOY • ITOC: +8 days YOY, 119 days (FY 23: 108 days, 1H 23: 111 days) High inventory in Greater China Declining sales performance in 1H 24 • System inventories -6.8% YOY Remain healthy At June 30 December 31 June 30 (In HK$ million) 2024 2023 2023 Inventori
Slide 36: Business Outlook
Business Outlook • Five-Year Strategy Launch: "Giordano - Beyond Boundaries" • Q2 Quick Wins: Product Enhancement & Store Productivity • Improved Q2 Revenue in Greater China: -2.8% YOY (vs. -12.8% in Q1) • Target: Positive Growth in 2H 2024, Flat Yearly Revenue vs. 2023 • SS25 Global Buying Conferen
Slide 37: 2030 Vision, mission, corporate values
2030 Vision, mission, corporate values In Phase 1, we leveraged 3 sources of inputs to support our diagnosis… To be the best Asian apparel brand To make people "Feel Good" and " Look Great" Updating expertise and Exceeding customer's Doing things right Thinking out of the box Less is more sharing kn
Slide 38: We Have What It Takes: Team Giordano
We Have What It Takes Team Giordano 38
Slide 39: Q&A
Q&A
Slide 40: Thank You
GIORDANO THANK YOU.