Esprit models fashion comeback after mid-life crisis
Hong Kong fashion retailer perseveres with a turnaround strategy, its shares down 94 per cent from their peak a decade ago
What’s been the world’s best-performing major retail stock so far this quarter, after Uniqlo owner Fast Retailing? Gap? H&M?
Based on Bloomberg Intelligence’s index of specialty apparel stores, it’s Esprit. Remember them?
The Hong Kong-based chain looked like it had the world at its feet back in 2007. Sales were on track for their 15th consecutive year of double-digit growth, net income had risen fivefold in as many years and the company’s enterprise value was more than 17 times forecast Ebitda -- well above H&M, Inditex and Fast Retailing.
How the mighty have fallen. Esprit’s shares are now down 94 per cent from their peak. Ten years ago, Bloomberg had recommendations on the stock from 22 equity analysts, with 19 rating it a buy. Nowadays, only seven are paying attention, and six of them suggest selling out.
For all the doom and gloom, there are actually signs that Esprit’s season in hell is nearing an end. Same-store sales, which have been declining for most of the past decade, grew by 8.1 per cent in the 12 months through June, the company said in annual results Tuesday.
Excluding exceptional items, Ebit of the underlying operations came in at a HK$572 million ) loss, beating all six analyst estimates compiled by Bloomberg. Net profit was HK$21 million, compared with a net loss of HK$3.7 billion last year.