Esprit warns of big loss as Europe shuts down

Fast-fashion retailer Esprit says foot traffic into its stores worldwide have evaporated in the wake of the coronavirus pandemic and warned shareholders to expect a “considerable loss”.

Public health initiatives enacted in many countries across the world aimed at slowing the spread of the pandemic have resulted in the closure of “a significant number of stores,” said Esprit company secretary Ophelia Lo.

Public life has been locked down in France, Italy, Spain, Poland and Austria with other European countries most likely to follow, she said. All of those are important markets for Esprit which as part of a major restructuring plan is refocusing its business on Europe.

“Obviously apparel retail sentiment is at its lowest level possible and store traffic in the group’s retail stores and its partners’ points of sale has subsided entirely,” said Lo.

“In addition, the logistics of the supply chains of merchandise shipments are significantly affected.”

Esprit expects the pandemic will “significantly adversely impact the sales of the group” in the second half of the current financial year, ending June 30.

“As a result, management expects the group to incur a considerable loss in the second half,” said Lo.

Right now, Esprit management cannot quantify the actual impact of the pandemic on the group’s business performance, given the inability to predict the speed and extent to which the pandemic will spread in markets in which the group and its suppliers operate in, and with no reliable estimation on when the pandemic may be over.

“The company will continue to diligently assess the impact of the pandemic on the group’s business performance and will make appropriate announcements on updates as and when necessary,” she said.

Meanwhile, the company will take “all practicable measures to cope with the challenges ahead,” including using working capital management and cost-control measures, and exploring financial support provided by local governments.