Esprit Holdings Ltd. surged in Hong Kong after hiring former Inditex SA manager Jose Manuel Martinez Gutierrez as chief executive officer, tapping a competitor to revive the retailer from a profit drop and management exodus.
Esprit jumped as much as 38 percent and headed for its biggest gain in 14 years after its filing with Hong Kong’s stock exchange on the appointment. Martinez, most recently group director of distribution and operations at Inditex, assumes the role on or before the end of September, Esprit said.
He will take the helm after the apparel company in September posted a 98 percent drop in fiscal year profit and said its brand had “lost its soul” as it lost customers to Hennes & Mauritz AB and Inditex. CEO Ronald Van der Vis quit June 12 and Esprit reported the departure of its chairman a day later.
“It’s definitely positive,” said Andrew Sullivan, principal trader at Piper Jaffray Asia Securities Ltd. “This new guy knows how a fashion retailer works.”
Esprit, which gained 8.1 percent in morning trading ahead of the announcement, rose 33 percent to HK$13.28 at 1:48 p.m. local time, bound for its biggest advance since January 1998.
Martinez will be paid 1.5 million euros ($1.9 million) a year with an annual bonus of as much as 1.5 million euros, which is guaranteed in the first two years, Esprit said. He will be given a sign on bonus of 1.25 million euros as well as 5 million share options.
His professional career has covered investment banking, strategy consulting and management positions in the retail industry, according to the company’s statement. He has led transformation projects to improve Inditex’s supply chain management and has also held the position of country manager for the Zara brand across Scandinavia, according to the statement.
The management departures in June came six months after the company’s chief financial officer resigned and left Esprit with a gap in senior management as it struggles to recover from a three-year profit decline. Esprit’s stock plunged 22 percent in Hong Kong on June 13, the most in 15 years, on news of the CEO’s departure, before trading was suspended.