Esprit Plummets After Forecasting Annual Loss: Hong Kong MoverVinicy Chan
Esprit Holdings Ltd., the apparel seller whose two top executives quit last year, fell the most in more than five months in Hong Kong trading after forecasting a loss on store closures and a drop in the value of goodwill.
The clothing maker and retailer dropped 4.8 percent to HK$10.38, the biggest decline since Nov. 16 as of the close of trading in Hong Kong.
Revenue dropped 7.9 percent to HK$6.72 billion ($866 million) in the three months ended March from a year earlier, Esprit said in a stock exchange statement yesterday. 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 in the region. The clothier has invested in advertising and store upgrades as it faces competition from rivals including Hennes & Mauritz AB, Fast Retailing Co. and Inditex SA’s Zara.
Esprit lost two executives in 48 hours in June. Former Chairman Hans Joachim Koerber resigned a day after then-Chief Executive Officer Ronald Van der Vis quit. The departures fueled doubt over the company’s ability to see its transformation plan through.
The company appointed Jose Manuel Martinez Gutierrez, a former Inditex SA manager, to replace Van der Vis. Esprit has hired two executives from Zara with fast-fashion expertise, Martinez told reporters in Hong Kong today, without giving the names of the new hires.
The transformation plan is the “right way to go” although it will take another 18 months to implement, he said. The European market remains weak in the short term, Martinez said. The brand aims to cut down the time it takes to get new designs into stores.