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Tag: esprit

  • Struggling Esprit axes more stores, 1200 staff

    Struggling Esprit axes more stores, 1200 staff

    Apparel chain Esprit will axe 1200 employees globally, including 100 in its Hong Kong office and 800 store employees in Germany as part of its ongoing restructuring program.

    A permanent reduction in salaries and benefits will be imposed on all remaining staff, except for those working in stores.

    Esprit has received court approval to open insolvency proceedings for its German subsidiaries allowing it to continue with the self-administration process under which it will streamline its business in Europe.

    In a filing with the Hong Kong stock exchange, Esprit said Dusseldorf District Court-appointed custodian Dr Biner Baahr, who has worked with Esprit executives since March to complete a restructuring plan, will continue in his role overseeing the plan’s implementation in a process similar to the US’ Chapter 11 restructuring process, called Protective Shield Proceedings.

    A creditors’ meeting will be held on August 19 to assess claims made before and during the Protective Shield Proceedings before a vote is held on the percentage of the creditors’ claims which will be paid out.

    The job cuts announced this week following the closure of all 56 Esprit stores across Asia, outside Mainland China, this week. Another 50 will now be axed in Germany – stores which accounted for 17.2 percent of the group’s total revenue in the year to June 30.

    Another part of the restructuring plan will see contracts with service providers renegotiated to obtain more favorable terms.

    Esprit calculates the combined savings from these initiatives will amount to US$116 million, but one-off costs of the restructuring will add up to about $64.5 million in the June 2021 year.

    Meanwhile, Esprit says its management team is currently working to strengthen the brand’s purpose, create a “consistent customer experience across all touchpoints,” improving production quality and sustainability credentials and focusing on “full-price sales”.

    A further update will be released along with the company’s annual results by the end of September.

    Esprit shares are currently trading in Hong Kong at around US 11 cents each.

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  • Esprit closing all of its Asian stores before June 30

    Esprit closing all of its Asian stores before June 30

    Crippled apparel group Esprit is to close all its stores in Asia, except those in Mainland China, by the end of June.

    The decision follows an appalling slump in sales during the last nine months, which worsened during the March quarter when the Covid-19 crisis hit, forcing retail stores to close or reduce trading across many markets.

    All 56 company-run stores located in Singapore, Malaysia, Taiwan, Hong Kong and Macau will close, but the company says the sales through those shops represented less than 4 percent of group turnover during the nine months to March.

    However, the company will continue to operate wholesale and licensing businesses in those markets, suggesting the brand will endure, most likely through department stores and multi-brand stores.

    In the March quarter, Esprit sales in Asia were down by 52.2 percent – 61.3 percent in its stores and 54.9 percent at the wholesale level. Online sales, however, rose by 13.9 per cent. In contrast, sales across Europe fell by 22.2 percent, 36.2 per cent at retail level and 22.5 percent at wholesale. Online sales fell 7.1 percent while licensing and ‘other’ sales were down 16.7 percent.

    Globally, revenue fell 25 percent for the quarter and by 18.1 percent for the nine months to March.

    In the nine months to March, retail sales in Asia fell 44.2 percent, by 48.7 percent at the store level, 45.3 percent wholesale and 8.1 percent online.

    The company estimates closing its Asian stores will result in one-off costs for severance pay and to exit leases of between HK$150 million and $200 million (US$19 million to $26 million) which will be incurred in the current June quarter.

    On the mainland, Esprit reduced its China investment last December. Through a subsidiary called Million Success, it retained a 40-per-cent stake in the Esprit China business, with Hong Kong-based Mulsanne Group holding the balance.

    The Asia store decision comes just a month after Esprit placed its six German companies into a form of protective administration to allow restructuring and cull staff numbers under protection from creditors. Once it emerges from that process, and with its Asian business essentially all but gone, the company will focus on Europe with less staff and fewer stores, although whether the crippled, lackluster brand can survive at all up against the regional powerhouses of H&M and Zara parent Inditex is debatable.

    In a stock-exchange filing overnight, Esprit described the Asian store closures as part of a restructuring initiative “to focus resources and recalibrate operations in order to cope with the challenges posed by the pandemic most effectively and efficiently”. However, as the nine-month figures above clearly show, Esprit’s sales were in freefall in the region long before Covid-19 made its appearance.

    A key indicator of how dire the company’s position came in January when its most high-profile recent hire, chief product and brand officer Mia Ouakim, quit after just a year in the role. Ouakim, who had previously worked with high-end brands Burberry and Tommy Hilfiger, left to take up an opportunity outside the company.

  • Esprit Bodywear concept store debuts in Europe

    Esprit Bodywear concept store debuts in Europe

    Fashion label Esprit has opened its first Esprit Bodywear concept store in an exclusive partnership with Dutch group Van Keulen Retail.

    Located in downtown Hilversum in the Netherlands, the new 140sqm store showcases the brand’s lingerie, swimwear, sportswear, nightwear and loungewear collections.

    The first store of its kind for the brand in the world, it will act as an experiment for Esprit as the troubled company continues to explore options for reviving its lackluster sales of the last few years. The company is pursuing a global restructure which was beginning to show signs of success before the advent of the coronavirus pandemic.

    Last month, the company placed its German subsidiaries into protective administration to allow a speedier restructuring of the Hong Kong-listed company’s European business.

    Stock in the new Esprit Bodywear store will target a broad demographic, with styles “made for everybody” according to a statement by the company, including push-ups and figure-smoothing pieces.

    “With our Esprit Bodywear collections we aim to deliver equally joy, comfort and function for the modern women’s lifestyle – from day to night and all activities,” said Maria Pambori, senior VP – head of lifestyle products at Esprit.

    “We attach great importance to a holistic offer from perfectly fitting underwear, comfy nightwear and loungewear to our more active offer which, in addition to a stylish look places all attention on function, like our swimwear and our sports collection”, she said.

    Esprit’s partner in the new venture, Van Keulen Retail is described as a successful and experienced franchise family business from South Holland.

    “We believe that with our high-quality products and Werner van Keulen’s knowledge and retail experience, Esprit Bodywear is a great addition to the Dutch retail landscape,” said Wouter Mol, head of franchise Benelux & UK at Esprit.

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  • Esprit places its German subsidiaries into administration

    Esprit places its German subsidiaries into administration

    Hong Kong-listed apparel retailer Esprit has placed six German subsidiary companies in administration to give them protection during the coronavirus crisis, which has decimated sales.

    The move was finalized at the end of last week while the company’s shares were suspended from trading.

    The measure, called Protective Shield Proceedings under the German Insolvency Act, allows restructuring to take place in self-administration. Esprit stresses the process is only available to businesses that are still liquid – ie: they are able to continue to meet day-to-day expenses as opposed to long-term debt.

    In an explanatory statement filed with the Hong Kong stock exchange, Esprit said that with many countries implementing public health measures and taking drastic actions to slow the spread of the coronavirus pandemic, all of Esprit’s European stores have been temporarily shuttered, along with almost all those of the group’s franchise and wholesale partners.

    “Subsequent to the announcement, the position of the European companies in the group has further deteriorated significantly, as they currently generate only weak e-commerce turnover, while salaries, rents and operating costs continue to accrue.”

    Esprit describes the protective self-administration as a “proactive and forward-looking measure to protect the solvency and liquidity of the group”. It protects the company from claims from individual creditors while they work out a restructuring plan for the approval of creditors and the courts, which must be lodged by June 29.

    The German courts approved the process on Friday, appointing Dr Biner Bahr, a Dusseldorf-based partner of the international law firm White & Case, as the preliminary custodian to supervise the restructuring of the subject subsidiaries in self-administration. Esprit has appointed Detlev Specovius, a partner of the German restructuring law-firm Schultze & Braun, who has extensive experience in self-administration cases, to actively support the process.

    Esprit said in its filing that while under the protective shield process, it will continue to “pursue and accelerate” the group’s restructuring plan launched in 2018.

    “The restructuring plan will help to significantly reduce the liabilities of the [German subsidiaries] to a sustainable and manageable level and one that is in-line with the business needs of the group. By pursuing the Protective Shield Proceedings, the subsidiaries aim to effectively restructure all their liabilities and long-term lease contracts, obtain funding for salaries and social security payments of the German workforce from the German Federal Employment Agency and negotiate with works councils for more flexible solutions.”

    Esprit said the move was necessary because while the group is currently liquid, its future liquidity was threatened due to the pandemic and its consequences.

    “The company has been working relentlessly to secure the continued operation of all other European subsidiaries in order to allow each of them to return to its ordinary course of business when public life will start again and shops will be reopened with the lifting of the mandatory public lock-down measures as the pandemic subsides in the future,” Esprit said.

    “Facing the unprecedented challenge caused by the pandemic, management is focused on optimizing and streamlining the group’s business in order to be stronger, leaner and fitter so as to be better placed to pursue the market opportunities that may arise after the pandemic.”

    In Hong Kong, Esprit’s share price fell by more than 20 percent when trading resumed this morning. From a previous closing price of HKD 71 cents last week before trading was suspended, it fell below 55 cents in early trading, before recovering to about 60 cents (about USD0.077).

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  • Esprit warns of big loss as Europe shuts down

    Esprit warns of big loss as Europe shuts down

    Fast-fashion retailer Esprit says foot traffic into its stores worldwide have evaporated in the wake of the coronavirus pandemic and warned shareholders to expect a “considerable loss”.

    Public health initiatives enacted in many countries across the world aimed at slowing the spread of the pandemic have resulted in the closure of “a significant number of stores,” said Esprit company secretary Ophelia Lo.

    Public life has been locked down in France, Italy, Spain, Poland and Austria with other European countries most likely to follow, she said. All of those are important markets for Esprit which as part of a major restructuring plan is refocusing its business on Europe.

    “Obviously apparel retail sentiment is at its lowest level possible and store traffic in the group’s retail stores and its partners’ points of sale has subsided entirely,” said Lo.

    “In addition, the logistics of the supply chains of merchandise shipments are significantly affected.”

    Esprit expects the pandemic will “significantly adversely impact the sales of the group” in the second half of the current financial year, ending June 30.

    “As a result, management expects the group to incur a considerable loss in the second half,” said Lo.

    Right now, Esprit management cannot quantify the actual impact of the pandemic on the group’s business performance, given the inability to predict the speed and extent to which the pandemic will spread in markets in which the group and its suppliers operate in, and with no reliable estimation on when the pandemic may be over.

    “The company will continue to diligently assess the impact of the pandemic on the group’s business performance and will make appropriate announcements on updates as and when necessary,” she said.

    Meanwhile, the company will take “all practicable measures to cope with the challenges ahead,” including using working capital management and cost-control measures, and exploring financial support provided by local governments.

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  • Esprit warns of big loss as Europe shuts down

    Esprit warns of big loss as Europe shuts down

    Fast-fashion retailer Esprit says foot traffic into its stores worldwide have evaporated in the wake of the coronavirus pandemic and warned shareholders to expect a “considerable loss”.

    Public health initiatives enacted in many countries across the world aimed at slowing the spread of the pandemic have resulted in the closure of “a significant number of stores,” said Esprit company secretary Ophelia Lo.

    Public life has been locked down in France, Italy, Spain, Poland and Austria with other European countries most likely to follow, she said. All of those are important markets for Esprit which as part of a major restructuring plan is refocusing its business on Europe.

    “Obviously apparel retail sentiment is at its lowest level possible and store traffic in the group’s retail stores and its partners’ points of sale has subsided entirely,” said Lo.

    “In addition, the logistics of the supply chains of merchandise shipments are significantly affected.”

    Esprit expects the pandemic will “significantly adversely impact the sales of the group” in the second half of the current financial year, ending June 30.

    “As a result, management expects the group to incur a considerable loss in the second half,” said Lo.

    Right now, Esprit management cannot quantify the actual impact of the pandemic on the group’s business performance, given the inability to predict the speed and extent to which the pandemic will spread in markets in which the group and its suppliers operate in, and with no reliable estimation on when the pandemic may be over.

    “The company will continue to diligently assess the impact of the pandemic on the group’s business performance and will make appropriate announcements on updates as and when necessary,” she said.

    Meanwhile, the company will take “all practicable measures to cope with the challenges ahead,” including using working capital management and cost-control measures and exploring financial support provided by local governments.

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  • Embattled Esprit posts another loss as sales tumble SE Asia

    Embattled Esprit posts another loss as sales tumble SE Asia

    Embattled fashion label Esprit posted another loss in the December half-year, as sales plunged by HK$1 billion – largely due to a major store cull in Asia.

    Esprit recorded a loss of HK$331 million (US$42.46 million) for the period, compared with a $1.773 billion (US$227 million) deficit in the December 2018 half. The previous year’s figures were impacted by one-off restructuring costs and write-downs associated with implementing its strategic plan.

    Global sales were down from $6.766 billion ($867.931 million) to $5.763 billion ($739.249 million). In Asia, the company reported a sales decline of 40 percent, as it heavily rationalized its store network.

    Despite the red ink, Esprit’s management says the execution of its strategic plan to restructure the company and revitalize the brand “has continued to progress well and is on track”.

    “Overall, the management is pleased with the performance of the group for the six months … as we have delivered financial results in line with management expectation despite the challenging market conditions,” it said in a results filing.

    Asia, where Esprit has stores in China, Singapore, Malaysia, Taiwan, Hong Kong, Macau, Thailand and the Philippines, accounted for just 7.2 percent of group sales in the period. Sales across the region fell 40 percent year on year, mainly due to a 36-per-cent reduction in the trading area as unprofitable stores were closed.

    The Asian network was culled from 82 standalone stores on January 1 to just 55 by December 31 and concession counters from 111 to 75. All 33 outlet stores in the region were closed last year.

    “Consumer traffic remains one of the biggest problems for retail in the region which recorded a decline in comparable consumer traffic of approximately 23 percent. Comp-store sales in the region declined by 16.9 percent,” the company said.

    In China, Esprit entered into a partnership with Mulsanne Group to manage the market, which it says will create a strong base for the brand, improve the relevance and accelerate growth.

    In Europe, which now accounts for 45 percent of its sales, the company has increased the proportion of stock sold at full price, improved its gross profit margin and grew comp-store sales in three of the six months.

    Global operating costs were slashed by 20 percent during the half-year, and underlying operations “almost broke even” with a loss of HK$15 million (US$1.9 million).

    “Today the group’s business is in a much better state than 12 months ago,” the company said in its results filing. “It is leaner, quicker, fitter, more agile, and is well along the way to creating a new culture which is all about empowering and having fun while delivering results.”

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  • Key Esprit hire quits after just one year in the role

    Key Esprit hire quits after just one year in the role

    A key executive hired as part of fashion label Esprit’s turnaround plan has quit unexpectedly after just one year in the role.

    The company revealed in a stock-exchange announcement that chief product and brand officer Mia Ouakim has stepped down from her role at the group to pursue her career outside the company.

    The former Burberry and Tommy Hilfiger executive took the position early last year as part of the struggling fashion retailer’s turnaround plan. The firm said that during her tenure, Ouakim unified the brand and product teams under one strategy and led improvement in product performance by reducing options and establishing “a clear collection architecture”. She additionally spearheaded the development of “important brand-building capsules and collaborations”.

    Esprit’s board has appointed Daniel Mayer, previously the head of wholesale Europe and Americas SVP within the company, as the firm’s incoming CPO.

    “Mayer has a unique understanding of Esprit’s core customer and markets and brings a proven track record in strategy, product development, sales and leadership,” said Esprit.

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  • New partner signed to manage Esprit Kids range

    New partner signed to manage Esprit Kids range

    Hong Kong-headquartered fashion brand Esprit has signed with Kids Fashion Group (KFG) to manage the firm’s design, production, and distribution of the Esprit Kids collection.

    The new contract follows the end of a five-year agreement with French childrenswear retailer Groupe Zannier, which has managed Esprit’s childrenswear brand since first signing in 2015.

    KFG’s first Esprit Kids collection under the new agreement is expected to be released to the market in around July this year. Customers will be able to purchase items from the collection at wholesalers, online and selected retail outlets.

    Kids Fashion Group has a significant distribution network throughout Europe and has a strong sales force in the German market.

    “Kids Fashion Group is a true children’s apparel expert with rich experience in designing and producing high-quality children’s apparel that transport great brand statements,” said Esprit in a statement.

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  • Esprit results signal looks promising

    Esprit results signal looks promising

    Embattled fashion retailer Esprit believes its first-quarter results prove its restructuring program is on track.

    The Hong Kong-listed company recorded a year-on-year global sales decline of 10.8 percent in local currency terms. But in a stock-exchange filing, the company said the pressure from falling sales was “more than compensated by significant cost savings which led to an improvement in our operating results”. The company did not release profit figures, only sales data.

    In the filing, Esprit said management was “encouraged by the progress made” in the three months to September 30 and “is confident that the group is on the right track to recovery”.

    Esprit sales in Asia fell 44.4 percent from HK$314 million (US$40 million) to $175 million ($22.3 million), however the brand performed better in Europe where sales fell 11.6 percent (or 7.4 percent on a currency-neutral basis) from $3.02 billion ($385.5 million) to $2.671 billion ($340.9 million). Total group sales were $2.846 billion ($363.3 million), the 10.8 percent decline comparing favorably to a 14 percent decline in company-controlled retail space.

    The company said in the core European market, which accounts for 85.7 percent of its revenue, it achieved small comp-store sales growth in August and September. A reduction in discounting saw comp-store gross profit improve, but it did not release figures.

    In Germany, wholesale sales which have declined every quarter for seven straight years, improved by 1.8 percent in the latest quarter.

    “This is an encouraging development thanks to ongoing progress made in building a best-in-class wholesale model to serve our wholesale partners,” the company said.

    Again, while not releasing figures, Esprit said reduced operating expenses due to reduced headcounts, the closure or resizing of unprofitable stores, and a persistent discipline on cost control and efficiency measures enabled it to reduce operating expenses “significantly”.

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  • Another huge loss for retailer Esprit

    Another huge loss for retailer Esprit

    More writedowns and restructuring costs have seen fashion retailer Esprit post another full-year loss, but the company is adamant its recovery plan is beginning to show results.

    With fewer stores, sales were down in all of its markets, but executive chairman Dr Raymond Or told shareholders in results filed overnight that the second half-year showed a significantly reduced operating loss.

    Group sales for the year to June 30 were HK$12.9 billion (US$1.65 billion), down from $15.5 billion last year. The group recorded a loss attributable to shareholders of $2.14 billion, an improvement on last year’s $2.55 billion.

    Or said the group’s underlying operations (before exceptional items, interest and taxation; its LBIT) improved from $909 million last year to $587 million this year.

    Esprit has launched a multi-year strategic plan to turn around its losses by improving the product, right-sizing its store network and restructure behind-the-scenes operations. Or said that plan only started to take effect in the second half of the year, when the LBIT was down from $773 million to $255 million.

    “This improvement in performance was primarily the result of our proactive and decisive cost control initiatives highlighted by actions to eliminate loss-making stores as well as bold measures to right-size the organization and our global distribution network, including the downsizing of corporate offices so as to achieve savings across all key cost lines. Taken as a whole, these initiatives resulted in savings in regular operating expenses of $1.742 million or 16.6 percent in local currency terms; thus we are well on track to achieve the targeted annualized expenses savings of $2 billion over two years from the 2017/18 level.

    “These savings have significantly reduced our cost base and will provide a leaner platform that we can leverage in the future as we embark on top-line growth,” said Or.

    “The last financial year marked a year of significant changes for the group and will be remembered as being pivotal towards the turnaround and restoration of … Esprit.”

    He said retailer Esprit now has a clear strategic plan and the right team in place to return Esprit to sustainable growth and profitability.

    The bottom line was heavily impacted by one-off restructuring costs which accounted for the bulk of $1.493 billion in exceptional expenses for the year.

    After several years of multi-billion dollar losses, one of the reasons Esprit has survived when other fashion retailers might have collapsed is that the group is debt free. At the end of June it still had a $3.282 billion cash balance.

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  • Esprit unveils its future proof store design in Beijing

    Esprit unveils its future proof store design in Beijing

    Fashion label Esprit has unveiled a new concept store in Beijing as it continues its long journey of reinvention.

    “Our new store in Beijing is a showcase for the Esprit brand,” said Esprit Group CEO Anders Kristiansen. “With surprising and functional design details and bright and social spaces, we think this is a great expression of the spirit of Esprit.”

    Hong Kong-listed Esprit sees China as a key market in its bid to resurrect its brand reputation, sales and profitability: it wants to open 220 stores on the mainland by 2023 and as many as 80 elsewhere in Asia.

    The most remarkable feature of the Beijing store which opened last week is the huge prominent opaque brand name across the store’s glass street frontage. Inside the design has been described as a blend of “California cool”, bold graphics and bright colours. The store was designed by Ettore Sottsass.

    A strategic change to the store layout is the relocation of the cashier’s counter into the middle of the store, a move aimed at optimising the interaction between store staff and customers.

    “This forms a social hub that invites customers to stay, converse and relax and further experience the Esprit brand,” said a spokesperson.

    Across the whole store, the space is clean and uncluttered, putting the focus back on the product.

    “Open areas encourage exploration and give space to create stories around the collections,” the spokesperson said.

    While features of the store are likely to be rolled out across Esprit’s global markets, for now the company wants to assess the impact on sales and customer engagement to refine the model.

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  • Esprit shoe range to be developed with Germany’s Deichmann

    Esprit shoe range to be developed with Germany’s Deichmann

    Hong Kong-headquartered fashion brand Esprit has signed a deal with German shoe retailer Deichmann to jointly develop a footwear range.

    The range will be positioned as offering value for money with designs evolving to reflect fast-changing market trends. It will go on sale in Esprit stores and online during the northern hemisphere spring of next year. Deichmann stores will also carry an Esprit-branded lineup.

    Deichmann will manage the materials sourcing and supply chain requirements to ship product to wholesalers, while the two companies will work together on the designs.

    “In collaboration with Esprit, we would like to be at the forefront of setting trends in the development of fashionable shoe ranges, and we consider Esprit to be a valuable addition to our footwear range,” said Heinrich Deichmann, the company’s chairman.

    “We are looking forward to a close and successful collaboration.”

    Esprit group CEO Anders Kristiansen said Deichmann has enormous expertise in the shoe business and a good understanding of the Esprit brand.

    “I am convinced that together we will develop inspired and fashionable shoes with great quality for our customers,” he said.

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  • Esprit’s restructuring shows first Results

    Esprit’s restructuring shows first Results

    Esprit’s restructure is beginning to pay off, the company says, despite another quarterly same-store-sales decline.

    For the three months to March 31, Esprit sales were HK$3.156 billion (US$402.3 million), down 11.6 per cent in local currency on the same period a year earlier. However, the company said that marks an improvement on the 12.4 per cent reduction in retail space occupied by the fashion brand.

    “This is the first-time since the first quarter of 2017-18 where the group recorded a quarterly revenue decline that is less than the corresponding space reduction,” the company said in a stock-exchange filing.

    “It is worth noting that while the quarter recorded a revenue decline, the rate of decline has continued to narrow quarter-on-quarter, reflecting a positive trend of improvement.”

    During the first quarter to September 30, sales declined 16.2 per cent, in the next quarter by 12.5 per cent and now to 11.6 per cent.

    The “improvement” was mainly driven by Germany which accounted for the largest share of the group’s sales. For Asia Pacific, the higher rate of revenue decline in the second quarter and third quarter was mainly due to the group exiting Australia and New Zealand, where all stores were closed by the end of last September as part of Esprit’s restructure.

    The company said it remains focused on the execution of its Strategy Plan to restore Esprit to sustainable growth and profitability.

    “Management is encouraged by the quarter-on-quarter improvements seen in different aspects of the business … and the progress of the strategic initiatives are progressing well and on track.

    The group is encouraged by the initial progress achieved during the early stages of the Strategy Plan, and this gives us confidence that we are on the right track. However, it is important to appreciate that the strategic closure of loss-making stores will exert pressure on our top-line in the short term, and as other initiatives are still work-in-progress at this stage, it will require time to make the corresponding improvements in brand and product visible to our customers for attracting them back into Esprit stores.”

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  • Esprit’s loss in line with forecast

    Esprit’s loss in line with forecast

    Fashion retailer Esprit shuttered 91 stores in the six months to December and recorded a loss of HK$1.773 billion (US$225.876 million). While the loss is massive, it is within the estimates Esprit provided at an investor presentation last November when it unveiled its rescue strategy for the embattled Hong Kong-listed brand. The 91 stores closed during the fiscal half year come on top of another 50 in the half year preceding it. More closures are to come as the company trims its network to meet falling consumer demand for its range and save on rent.

    Esprit’s revenue for the half year fell to $6.766 billion, down 14.4 per cent in local currency terms, due to fewer stores and “reduced customer traffic across the distribution channels due to the weakness in brand identity and product appeal,” the company said in a stock exchange filing.

    The company’s share price fell from $2.04 to $1.83 (US 23 cents) as the results were released, before recovering a little this morning despite the results being inline with the company’s forecasts last November.

    Esprit “has a clear strategy plan in place setting forth bold changes to build a powerful organisation and restructure the cost base and develop a new model for the future,” the company reiterated in its filing. That plan includes becoming a leaner and more efficient organisation, eliminating loss-making areas of the business, sharpening the Esprit brand identity and putting the customer at the centre of everything the group does, and

    improving the product offer and its relevance to consumers.

    “The execution of the strategy plan is progressing well and is on track. While the group is encouraged by the initial progress and [has] a committed team in place to see the execution through, it is important to appreciate that it will take time to see this translate into a positive business performance, as most initiatives are still at this stage a work-in-progress and it will require time to make the corresponding improvements in brand and product visible to our customers for attracting them back into Esprit stores.”

    Included in that process is the reduction of between 35 and 40 per cent of non-store employees, already completed in Asia and on track in Europe.

    Meanwhile, the company said that while revenues continued to decline in the first half, the rate of decline is slowing. In the three months to September, sales in local currencies fell by 16.2 per cent, while in the following three months, sales fell by 12.5 per cent.

    Asia Pacific – comprising mainly China, Hong Kong, Singapore, Malaysia, Taiwan, Macau, Thailand, India and the Philippines – accounted for just 10.4 per cent of the group’s total revenue, or $698 million. That was down 26.6 per cent, in part affected by the closure of the Australia and New Zealand Esprit businesses last year.

    Transition period

    Esprit says it expects the next two years to be a period of transition for the company and its brands

    “Revenue is expected to see further decline in the next two financial years due to closure of loss-making stores, before reverting to growth to be driven by impact from product and brand initiatives. Overall, the group expects revenue to increase at a compound annual growth rate of a mid-to-high single-digit percentage in local currency between FY19/20 and FY23/24.”

    It reiterated its earlier forecast of breaking even in two to three years time.

    A “low double-digit” decline in topline sales is expected in the second half of the current financial year.

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