Clothing retailer Esprit reports first-half loss
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Esprit has been in the midst of an ambitious revamp over the past year that has included store closures, price adjustments, new return policies, and technology and distribution improvements.
“Looking ahead into 2H FY15/16, we remain confident that we are heading in the right direction and are laying the necessary foundation to restore competitiveness and long term growth for Esprit,” the company said in its earnings report.
Turnover at Esprit’s largest market, Germany, grew 1.5 percent year on year in local currency terms. Retail turnover grew 8.6 percent, while wholesale turnover declined 9.6 percent.
Gross profit margin remained unchanged at 50.5 percent.
“The weakness in the Euro, if persists, will put some pressure on the group’s gross profit margin,” the company said.
Esprit, which earns the bulk of its revenues in Europe, said the operating environment appeared challenging amid volatile financial markets and economic uncertainty that might dampen consumer sentiment.
Shares in Esprit closed up 2.9 percent on Tuesday, outpacing a 0.3 percent fall in the overall market.
Questions & Answers
Q.What was Esprit’s financial performance for the first half of the year?
What was Esprit’s financial performance for the first half of the year?
Esprit reported a net loss of HK$238 million for the six months ending in December. This compares to a profit of HK$47 million in the previous year. Turnover also decreased from HK$10.7 billion to HK$9.3 billion.
Q.What factors contributed to Esprit’s reported loss?
What factors contributed to Esprit’s reported loss?
The company's loss was primarily hurt by a slowdown in China and a weak euro. A challenging operating environment with volatile financial markets and economic uncertainty also dampened consumer sentiment.
Q.How did Esprit's different sales channels perform in its largest market?
How did Esprit's different sales channels perform in its largest market?
In Germany, Esprit's largest market, overall turnover grew by 1.5 percent in local currency terms. Retail turnover increased by 8.6 percent, while wholesale turnover saw a decline of 9.6 percent.
Q.What impact could a persistent weak euro have on the company?
What impact could a persistent weak euro have on the company?
The company stated that if the weakness in the euro continues, it will put some pressure on the group's gross profit margin. Esprit earns the majority of its revenues in Europe.
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