Esprit sees 'slight' profit in first half

Struggling apparel retailer Esprit Holdings expects to turn a "slight" profit for the first half following stringent cost-cutting measures.

The mid-tier fashion retailer said in a profit alert to the Hong Kong stock exchange yesterday that it should see a small profit for the six months to December. In September it reported a loss of HK$4.39 billion for the year to June.

"That's in line with previous guidance from the company so it's not a surprise to us. We still maintain our numbers," CLSA consumer analyst Mariana Kou said. "Execution risk is still high and our take is that earnings will only recover in fiscal 2016, so a long way to go."

In 2011, the firm's profits fell 98 per cent and 2012 saw losses again with the sudden departure of its chairman Hans Joachim Koerber and chief executive Ronald van der Vis within 24 hours.

The chief executive post was filled by Jose Manuel-Gutierrez, formerly of Zara, who has since recruited a number of his former colleagues from the Spanish fast-fashion giant, focusing their efforts on improving product mix, pricing and cutting down the time it takes clothes to reach shop floors by half.

Esprit also said the brand expects a weaker second half as sales are typically softer because of seasonality. "A lot of the business comes from Europe so the first half includes Christmas. [In the second half] they don't have Labour Day or Chinese New Year like Asia," said Kou.