Fashion group Esprit reports wider first-half loss on brand weakness
- Esprit reported a net loss of HK$1.77 billion (US$225.5 million) for the six months ended December
- The downbeat result includes a HK$924 million loss on provision for store closures and leases
- Shares of Esprit have risen 30.8 per cent so far this year after a 62.74 per cent plunge in 2018
Fashion group Esprit Holdings on Tuesday posted a bigger loss for the first half amid changes in consumer behaviour, price competition and reduced customer traffic across its distribution channels due to weakness of its brand.
The Europe-focused clothing retailer reported a net loss of HK$1.77 billion (US$225.5 million) for the six months ended December, including a HK$924 million loss on provision for store closures and leases. That compared with a net loss of HK$954 million in the year-ago period.
Revenue slid to HK$6.77 billion from HK$8.04 billion.
Esprit said in November that it would cut about 40 per cent of its non-store jobs and reduce the number of products it sells in stores as it restructures in the wake of tough competition from online and fast-fashion retailers.
To deal with the challenging environment, the apparel group said it would shut loss-making stores, restructure its cost base and improve products offerings, while time would be needed to draw customers back into its stores.
“Looking ahead, the group expects the next two financial years to be a period of transition,” Esprit said in a filing to the Hong Kong bourse, adding that underlying operating profit was expected to achieve break even in two to three years’ time.
The group expects its revenue to further decline in the next two financial years due to closure of loss-making stores.
Shares of Esprit have risen 30.8 per cent so far this year after a 62.74 per cent plunge in 2018. That compared with an 11.3 per cent gain in the benchmark index so far in 2019.
