As clothing retailer Esprit tries to fashion its future, it faces a number of management challenges.
Consider this scenario. It has no big shareholder calling the shots. The top management is stuck in a revolving door. The company is losing out on the sales front to competitors, and it is struggling to carry out a four-year plan to spend HK$18.5 billion giving itself a makeover.
Lack of a controlling shareholder 'is quite unusual in Hong Kong', says David Webb, a corporate governance activist based in the city. 'This may make the company a takeover target', especially if the share price slumps to 'a very low level'.
After Esprit's chief executive, Ronald Van der Vis, and chairman Hans-Joachim Koerber both resigned over the course of two days this week, nervous investors sent its share price skidding 34 per cent, making the company the worst performer on the Hong Kong stock market.
It became the best performer yesterday when the shares rebounded 10 per cent to HK$10.14 each, following a management conference call with analysts on Thursday night aimed at reassuring investors that the company would stick to its overhaul strategy. The broader market rose 2.26 per cent.
'While the macro environment does add some headwind, we think that Esprit's brand is in a better state than the market appreciates, and they are making good progress on the transformation plan,' Gary Pinge, an analyst with Macquarie Capital Securities, said in a research note after the conference call.