Esprit Forecasts Annual Loss on Store Closures, Impairment
Esprit Holdings Ltd. (330), the Hong Kong- based apparel seller whose two top executives quit last year, forecast a ’’substantial’’ fiscal-year loss on store closures and loss of goodwill.
Revenue for the third quarter ended March 31 dropped 7.9 percent to HK$6.7 billion ($863 million) from a year earlier, Esprit said in a stock exchange statement today. The annual loss will come partly from a goodwill impairment of as much as HK$2 billion related to China investments, it said.
Esprit, which gets about 78 percent of its sales from Europe, in February posted a wider-than-estimated first-half loss of HK$465 million on weaker consumer demand there. The apparel seller has invested in advertising and store upgrades as it faces competition from bigger rivals including Hennes & Mauritz AB (HMB), Fast Retailing Co. Ltd. and Inditex SA (ITX)’s Zara.
Comparable-store sales fell 1.5 percent for the quarter ended March. Esprit raised more than HK$5 billion in a rights offer in November to fund efforts to revive its brand. The stock gained 1.5 percent this year and closed at HK$10.90 in Hong Kong today.
Esprit lost two executives over 48 hours in June as ex- chairman Hans Joachim Koerber resigned a day after then-Chief Executive Officer Ronald Van der Vis quit. The departures fueled doubts over the company’s ability to see its transformation plan through.
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