Shares in clothing retailer Esprit Holdings could start to look threadbare in coming weeks if fund managers decided to switch into other less 'risky' stocks, an analyst warned yesterday.
The Europe-focused retailer suffered the biggest intraday drop yesterday in three weeks after a magazine report said it had overstated the number of stores it had on the mainland. At one point, Esprit shares fell 14 per cent to HK$9.51 a share, but recovered some lost ground, closing down 7.46 per cent at HK$10.18.
The article by Next Magazine, which reported that up to 92 of Esprit's 313 mainland outlets either did not exist or could not be reached by telephone, dealt a heavy blow to the company, which was still recovering from a dismal earnings result that has caused the shares to dive by as much as 50 per cent since mid-September.
In a statement to the Hong Kong stock exchange yesterday, Esprit said the article could have been based on outdated information on the company's website, as it was updated occasionally.
The company was not in any talks regarding intended acquisitions. Chew Fook-aun, Esprit's chief financial officer, said the company had no plans to introduce any financial and strategic partners.
Alex Wong, asset management director at Ample Capital Group, said Esprit became an attractive buyout target when its market value fell below US$1 billion.