Esprit’s restructuring shows first Results

Esprit’s restructure is beginning to pay off, the company says, despite another quarterly same-store-sales decline.

For the three months to March 31, Esprit sales were HK$3.156 billion (US$402.3 million), down 11.6 per cent in local currency on the same period a year earlier. However, the company said that marks an improvement on the 12.4 per cent reduction in retail space occupied by the fashion brand.

“This is the first-time since the first quarter of 2017-18 where the group recorded a quarterly revenue decline that is less than the corresponding space reduction,” the company said in a stock-exchange filing.

“It is worth noting that while the quarter recorded a revenue decline, the rate of decline has continued to narrow quarter-on-quarter, reflecting a positive trend of improvement.”

During the first quarter to September 30, sales declined 16.2 per cent, in the next quarter by 12.5 per cent and now to 11.6 per cent.

The “improvement” was mainly driven by Germany which accounted for the largest share of the group’s sales. For Asia Pacific, the higher rate of revenue decline in the second quarter and third quarter was mainly due to the group exiting Australia and New Zealand, where all stores were closed by the end of last September as part of Esprit’s restructure.

The company said it remains focused on the execution of its Strategy Plan to restore Esprit to sustainable growth and profitability.

“Management is encouraged by the quarter-on-quarter improvements seen in different aspects of the business … and the progress of the strategic initiatives are progressing well and on track.

The group is encouraged by the initial progress achieved during the early stages of the Strategy Plan, and this gives us confidence that we are on the right track. However, it is important to appreciate that the strategic closure of loss-making stores will exert pressure on our top-line in the short term, and as other initiatives are still work-in-progress at this stage, it will require time to make the corresponding improvements in brand and product visible to our customers for attracting them back into Esprit stores.”