Esprit reports US$503 million loss as Covid-19 interrupts reform plan

Embattled Hong Kong-listed fashion retailer Esprit saw sales plunge 21 per cent in the year to June 30 to US$1.277 billion and after a variety of write downs, reported a loss attributable to shareholders of US$503.2 million. 

The company recalled a year of two halves – pre and post pandemic. 

“During the first half of the year, the group continued the execution of the strategic plan presented in 2018 to restore Esprit to sustainable growth and profitability,” wrote company secretary Ophelia Lo in the results filing. “A plan characterised by measures to become a leaner organisation with a smaller physical store footprint. These strategic goals have been put in place to slow the rate of sales decline, increase the mix of full price sales and lower operating expenses.”

But then the pandemic hit, causing prolonged store closures in the first half of the current calendar year. Sales in Europe and North America declined 41 per cent year on year in the March-to-June period, compared with an 11-per-cent decline in July last year to February. Lo said since stores reopened after lockdowns, “demand in the market remained suppressed compared to levels experienced at the height of the pandemic” which cost the group $155 million.

A further $77 million was due to a reduced store footprint, and a similar amount due to a sales decline in Asia Pacific where the company had closed all of its company-owned stores by June. 

Looking forward, Esprit says it plans to continue to focus on improving its brand identity, including a commitment to sustainability, enhance the customer experience and improve its product portfolio. 

After years of ongoing losses, Esprit’s position with regard to cash assets continues to decline. Debt-free apart from a $1 million loan, the company has cash, bank balances and deposits of $295 million as at June 30, down from $423.47 million a year earlier.

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