Lone Pine Raises Esprit Stake After Chief Executive Quits
Esprit Holdings Ltd. (330)’s largest shareholder, hedge fund Lone Pine Capital LLC, increased its stake as the shares plunged after the apparel company’s chief executive officer and chairman quit last week.
Lone Pine bought 1.39 million Esprit shares on June 13 following Chief Executive Officer Ronald Van der Vis’s resignation and 14.1 million shares on June 15 after the chairman had quit as well, according to Hong Kong Stock Exchange data.
The purchases by Greenwich, Connecticut-based Lone Pine, run by Stephen F. Mandel Jr., brought its holdings in the clothing firm to 14.17 percent. Esprit wants to revive earnings by adding stores in China and boosting marketing.
“I don’t think Lone Pine is increasing its stake for the sake of gaining control in the company,” said Gabriel Chan, a Hong Kong-based analyst at Credit Suisse Group AG. “As a hedge fund, they are more likely to bargain hunt.”
The June 13 and June 15 purchases raised its stake by more than 1 percent. Esprit shares closed up 2.6 percent to HK$10.30 today.
Lone Pine has more than doubled its stake in Esprit over the past 14 months, according to Hong Kong Stock Exchange data, which shows it held 6.23 percent in April last year.
Van der Vis’s resignation announcement late on June 12 drove the stock down 22 percent to HK$10.54 the next trading day. The Hong Kong-based company reported the departure of its chairman after the market closed on June 13. The company lost 73 percent of its market value last year.
After the resignations were announced last week, Esprit said it won’t change a strategy intended to boost the fashion brand’s revenue. In an investor presentation last year, the company said it planned to spend more than HK$18 billion ($2.3 billion) over four years on efforts to revive its brands through more marketing and a bigger Chinese presence.
Marathon Asset Management LLP is Esprit’s second largest shareholder with a 7 percent stake, according to data compiled by Bloomberg.
Esprit, which has been hurt by competition from rivals including Hennes & Mauritz AB (HMB) and Inditex SA (ITX)’s Zara, in September reported a 98 percent decline in fiscal year profit and said its brand had “lost its soul.”
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