Troubled apparel giant Esprit believe sit is on the brink of its comeback.
A strong performance by its retail channels (offline and online) led to an audited net profit of HK$21 million (US$2.7 million) for Esprit Holdings for its latest fiscal year.
This was also helped by lower running costs and a favourable net tax balance.
The manufacturer of clothing, footwear, accessories, jewellery and housewares also had a one-off gain from the sale of office space in Hong Kong, however that was offset by expenses related to accelerated cost-restructuring measures.
Independent non-executive chairman Dr Raymond Or Ching Fai says the group achieved good progress both strategically and financially over the past financial year, reaffirming its potential and laying the foundation for its road to recovery.
Overall market conditions have remained challenging, says the company. On the one hand, the industry is going through significant changes fuelled by the development of the online channels and increasingly aggressive price competition.
On the other hand, the macroeconomic picture was uncertain in Europe and turned especially weak in Asian markets. The economic slowdown in China and the devaluation of the renminbi combined to significantly dampen consumer sentiment.
“The weakness of the Euro currency against our reporting currency, the Hong Kong dollar, also placed considerable pressure on the group’s financial results.”
Esprit says the positive development of its retail channels, with the vertical omnichannel model implemented in the previous financial year, has improved the attractiveness of its products and the sales effectiveness of its retail stores and e-shop.
“As a result, we have achieved a gain in retail-space productivity for the first time in nine years, and this trend has been consistent throughout the year.”
Overall, the group’s revenue of HK$17.788 billion was virtually unchanged year-on-year, with a slight decline of 1.1 per cent in local currency. The gross profit margin improved slightly while operating expenses, excluding exceptional non-recurring items, eased by 1.9 per cent despite a decision to significantly increase marketing and advertising expenses.
“Once the company stabilises its profitability, we shall shift gears to accelerate growth.”
