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Esprit Jumps as Efforts to Revive Brand Boost Sales

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Esprit Jumps as Brand Revival Boosts Sales
Irene Ting, an Esprit Holding Ltd. employee, serves a customer at a store in Hong Kong. Photographer: Jerome Favre/Bloomberg

May 10 (Bloomberg) -- Esprit Holdings Ltd. climbed the most in more than a month after the Hong Kong-based clothing retailer that makes most of its revenue in Europe said same-store sales increased.

Esprit rose 5.4 percent to HK$14.78, the biggest gain since March 21, after yesterday reporting revenue at outlets open more than a year grew 0.5 percent in the three months ended March. The stock was the biggest percentage gainer on the benchmark Hang Seng Index, which fell 0.5 percent.

The retailer said it had completed the divestment of its North American retail operations, with the last store shut in April, and booked a HK$700 million ($90 million) gain, or writeback, for surplus provisions set aside for the closures.

The increase in comparable sales follows a 4.6 percent decline in the six months ended December 31. Chief Executive Officer Ronald Van der Vis wants to turn the company around by boosting China revenue and improving fashion designs for the company that last year said its brand had “lost its soul.”

“The trading statement is on balance better than I expected,” said Anne Critchlow, an analyst at Societe Generale in London who has a hold rating on the stock. “Esprit has made a good start in its transformation plan.”

Esprit plunged about 73 percent in Hong Kong trading last year as European rivals Hennes & Mauritz AB and Inditex SA’s Zara lured customers away. Esprit reported a 74 percent drop in first-half profit in February amid efforts to restructure the business.

Comparable-store sales, which strip out the effect of newly opened locations, rose 2.8 percent in Europe during the quarter, the company said yesterday. The company reported a 7.8 percent drop in third-quarter revenue.

To contact the reporter on this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net

To contact the editors responsible for this story: Anjali Cordeiro at acordeiro2@bloomberg.net; Stephanie Wong at swong139@bloomberg.net

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