Esprit shares soar after former chairman increases stake
Shares climb 22 per cent but Michael Ying shows no desire to rejoin board
The former chairman of Esprit Holdings, Michael Ying Lee-yuen, has shown no sign of wishing to rejoin the company's board after he increased his stake last week to once again become a major shareholder of the casual wear retailer.
"The board will consider [getting him back on the board] if he has the intention of doing so," said Raymond Or Ching-fai, chairman and an independent non-executive director of Esprit. Or said the company planned to introduce new board members who could contribute to the business, but he would leave Ying to make the decision himself on any return.
Esprit's share price jumped as much as 33 per cent yesterday, the most in 14 years, on the news that Ying had raised his stake in the company to 10.33 per cent on November 7 from 4.79 per cent.
Investors speculated that Ying, who played a key role in building Esprit into a successful global brand, could help the company boost its declining sales and regain the market share it had lost to rivals such as Gap of the United States, and Zara of Spain.
The company's stock closed at HK$12.96 yesterday, up 22 per cent, bucking a 1.55 per cent decline in the benchmark Hang Seng Index.
Ying joined Esprit in the 1970s. He helped expand the company's business in Europe and Asia. Under his leadership, Esprit's Asian distribution business was listed in Hong Kong in 1993. It became a constituent stock of Morgan Stanley's MSCI Hong Kong Index in 2000.
He stepped down as chairman in 2006 and remained a non-executive director until 2008. He also sold most of his stake in stages between 2008 and 2010 for more than HK$20 billion.
A year after Ying cut his ties with Esprit, the European-focused clothier reported its first decline in first-half profit in more than a decade as the global financial crisis hit sales. The decline continued in the following years, with the company saying it had "lost its soul". It then undertook a massive HK$18 billion plan of transformation.
"Mr Ying also believes Esprit needs reform," said Or, who often socialises with Ying. "He said there's no way out if Esprit continues to follow the old path."
Ying, 63, is married to former actress Brigitte Lin Ching-hsia. magazine ranked him Hong Kong's 14th richest person this year, according to Reuters.
Also last week, Lone Pine Capital, another major shareholder of Esprit, sold 62.5 mil- lion nil-paid rights shares in two transactions after the retailer said it would raise about HK$5.2 billion through a rights offering to support its reforms.
