Esprit posts H1 net loss of 954 mn Hong Kong dollars on weak sales

Esprit Holdings swung to a net loss in the first half, hit by weak sales at its brick-and-mortar retail stores and goodwill impairment due to a decline in its China business.

The fashion group is in the midst of an ambitious multi-year revamp that has included store closures, price adjustments, and technology and distribution improvements.

“Given the weaker-than-expected sales performance in 1H FY17/18, we remain cautious about the expectations for the second half of this financial year,” the company said in a filing to the Hong Kong stock exchange.

The Europe-focused retailer on Wednesday reported a net loss of HK$954 million ($121.85 million) for the six months ended December, compared with a profit of HK$61 million in the year-ago period.

Revenue slid to HK$8.04 billion from HK$8.32 billion.

Esprit had in January flagged a net loss of up to HK$980 million for the July-December period.

Bigger rival Sweden’s H&M, the world’s second-largest clothes retailer behind Zara owner Inditex , has seen sales growth stall in recent years as it has struggled to adapt to the shift online and fend off increased competition from other budget brands.