Esprit Holdings, the biggest Hong Kong-listed fashion retailer, yesterday saw its shares fall more than 10 per cent after warning of a 'significant' loss in net profit caused by one-off restructuring costs.
The share price of Esprit plunged by up to 10.11 per cent to close at a three-week low of HK$19.64, compared to a 1.81 per cent slide in the Hang Seng Index.
The company said in a filing on Thursday night that the net profit for the year to June would 'record a significant decrease due to the one-off restructuring costs'. But the turnover for the year is expected to remain similar to the level recorded in the previous period.
According to the filing, Esprit's board has approved a strategic plan to restructure its stores. But the company did not elaborate.
Analysts said the restructuring costs might be related to the disposal of loss-making businesses in the United States and Canada and closure of many stores with long-term leases in Europe and the US.
'As the European market remains sluggish, some marginally profitable [Esprit] shops on the continent have become less profitable, and the company may have to shut them down as well,' said Gabriel Chan, analyst at Credit Suisse.
'Despite the pain [brought on by the restructuring], it's a good sign that the management has recognised the problems in the operation and has started to work on them.'