Esprit posts USD566m annual net loss

HONG KONG, CHINA: Fashion retailer Esprit said on Tuesday, 10 September, that it suffered a net loss of HK$4.39bn (US$566m) in the year to June as it struggled to turn its brand around amid stiff competition.

The Hong Kong-headquartered chain said it was hit by various costs, including those relating to acquisitions in China and store closures.

The loss compares with a net profit of HK$873m for the previous year and is much larger than the HK3.48bn forecast in a survey by S&P Capital IQ.

It said revenue for the year was down 14.1% at HK$25.9bn, compared with HK$30.17bn previously, adding that the period was an extraordinarily challenging one for the company.

Esprit has been battling to pick up strength in a tough market that includes Spain's Zara and Sweden's Hennes & Mauritz. In May, it warned of a substantial loss for the fiscal year.

In a statement on Tuesday (9 September) it said: "The management team expects the next financial year to be a period of transition where Esprit aims to stabilise its business performance and build the basis for a sustainable turnaround."

The firm, founded in San Francisco in 1968, said last year it would invest US$2.4bn over four years as part of a transformation drive after suffering a 98% plunge in net profit in 2011.

Esprit raised US$667m in November last year by selling 646.1m shares in an effort to fund the plan.

Jose Manuel Martinez Gutierrez, a former senior executive at Spanish clothing retailer Zara, was appointed chief executive of Esprit August last year after former chief executive Ronald Van der Vis resigned.

Source: AFP via I-Net Bridge