Esprit Holdings welcomed its newest chief executive with a two-day stock decline and an analyst downgrade as the apparel retailer's earnings missed estimates for the fifth consecutive year. After Jose Manuel Martinez Gutierrez took control on Wednesday, the stock fell 5.67 per cent to HK$11.64 yesterday. UOB Kay Hian cut its rating on the stock to "sell" from "hold" after the retailer's annual profit of HK$873 million was below the HK$995.8 million average estimate of 13 analysts surveyed. Martinez, a former executive of Inditex, must convince investors, sceptical after the slump in the stock and the departure of its chairman and chief executive, that he has a plan to turn around declining sales in Europe and lure shoppers from competing brands such as Zara. "We remain sceptical about the promises made and the hopes pinned on the transformation plan," said Steven Leung, an institutional sales director at UOB Kay Hian. "We aren't sure if the new [chief executive] will remain committed to the plan or what kind of strategy he's going to adopt." Goldman Sachs reduced its price target on the stock to HK$11 from HK$11.70, and JP Morgan Morgan Chase cut its target to HK$11.50 from HK$19.50. Martinez took the place vacated by Ronald van der Vis, who announced his departure in June. Chairman Hans Koerber quit a day after Van der Vis, and the departure of both executives had raised doubts over succession as Esprit struggles to restructure its business. Van der Vis, hired in 2009, last year laid out a turnaround plan that included makeovers of existing stores and new ones on the mainland. Esprit's transformation plan was "ambitious", Martinez said on Wednesday. "My priority number one is not to disturb the company and to make sure this transition is smooth. "I'm fully agreed with the fundamentals of the transformation plan." Shares of Esprit surged the most since 1998 on August 7 after the appointment of Martinez on optimism the executive who ran distribution and operations for the owner of Zara stores would be able to replicate some of Inditex's success and help Esprit recover from a three-year profit decline. Esprit had sales of HK$30.16 billion in the year ended June, a decline of 10.7 per cent. It booked a HK$696 million write-back on a provision made for store closures in North America. Marketing expenses rose to HK$1.6 billion from HK$984 million, while net income in the second half was HK$318 million, compared with a loss of HK$2.06 billion a year earlier. Sales in Europe dropped 10.5 per cent to HK$23.7 billion, with Germany, Esprit's biggest market, falling 9 per cent. Europe accounted for 78.6 per cent of sales last year.