Esprit to close Australia and New Zealand retail operations
Fashion retailer Esprit Holdings plans to close down its loss-making operations in Australia and New Zealand, a move that would cost up to HK$200 million (US$25.48 million), according to a stock exchange filing on Thursday.
The company estimated a one-off charge between HK$150 million to HK$200 million would result from the closure of its retail operations in the two countries, which is expected to have a negative impact on the company’s results for the full financial year ending 30 June 2018.
The company plans to close 67 directly managed retail stores, including 38 concession counters in department stores and 13 off-price outlets in the two countries.
Espirt’s share price was down 3 per cent at HK$2.67 in early trade on Thursday after the company announced its divestment plan before the market open.
“Divesting the ANZ operations will allow management to concentrate efforts and resources in developing other markets in Asia (e.g. China, Hong Kong, Taiwan, Singapore and Malaysia) with profitable growth opportunities for the future, and avoid incurring further losses from our non-performing operations in Australia and New Zealand,” the company said in the stock exchange filing.
“The board considers that the rationalisation of the distribution footprint continues to be paramount in order to improve our bottom line, and that the intended divestment of the ANZ operations will allow Esprit to recharge its profit potential in the Asia-Pacific region.”
The Australia and New Zealand operations contributed HK$297 million (US$37.84 million) to the group’s revenue for the financial year to the end of June 2017, representing less than 2 per cent of the group’s total revenue.
Esprit has already announced plans to scale down operations in Europe. These include the closure of more than 40 “heavy loss-making” shops in “core” European countries, or make around a 10 to 15 per cent reduction in floor space, Jose Manuel Martinez, the chief executive officer said in February.
The company reported a net loss of HK$954 million for the six months ending December 31, its own first-half recording period, compared with a net profit of HK$61 million (US$7.79 million) for the same period in 2016. Revenue for the period fell 3.4 per cent on year to HK$8.03 billion, compared with HK$8.32 billion a year earlier.