Esprit slips 10pc following CFO's decision to quit
Esprit Holdings shares suffered their biggest decline in nearly two months yesterday following the resignation of the company's chief financial officer amid a restructuring plan to revive earnings.
But analysts remained optimistic about Esprit's prospects and advised investors to focus on the retailer's reforms and business performance.
The Hong Kong-listed clothing chain plunged 10.52 per cent to close at HK$10.72 yesterday, compared with a drop of 1.24 per cent on the Hang Seng index.
Esprit's chief financial officer Chew Fook-aun made his resignation public via a press conference call on Monday, saying he was leaving for personal reasons and could not spend the required amount of time in Europe for the company's rebranding campaign.
Brokerage CLSA said it was disappointing that the clothing chain had lost Chew's capable services, with analyst Aaron Fischer describing the executive as 'one of the better CFOs in Hong Kong'.
CLSA is one of seven of the 22 brokerages which monitor the stock calling for Esprit's shares to be sold. Nine recommended that investors hold the shares, while four called for investors to buy.
Esprit's share price had been on the rise since the group's chief executive Ronald Van der Vis held a presentation on November 22 to update investors about the progress of the restructuring. Shares jumped 8.7 per cent on Monday after Esprit called for a conference call at 5pm, with the market expecting good news.
Chew - who was appointed Esprit's CFO in February 2009, boosted his stake in Esprit last month by purchasing 100,000 shares.
Simon Lam Ka-hang from Christfund Securities said the rebranding campaign was headed in the right direction. Chew's departure would not cause many problems, as most of the burden of the plan's execution should lie with the chief executive.
Esprit announced a HK$18.5 billion restructuring plan in September to expand and refurbish its stores after seeing profit plunge by 98 per cent for the year ending June, due to store closure costs and the sale of US and Canadian operations. Van der Vis said on Monday that the transformation plan was still secure.
The euro-zone crisis continued to squeeze the retailer's profit as same-store sales in Europe - Esprit's largest market - fell 9.2 per cent in local currency terms in the September quarter. The retailer had more than 11,700 wholesale outlets in June, of which 1,100 were directly managed shops.