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Esprit Holdings moves out of the red

Fashion group Esprit Holdings says it has made a “significant recovery”, turning around its HK$238 million (US$30.6 million) loss to record a net profit of HK$61 million for its first half.

While the improvement was driven by retail sales, the group says two other major developments were a vital element of the growth in overall profitability for the half-year, to December 31:

  • The ongoing downsizing of the scale of the business, including the closure of unprofitable stores and low-performing wholesale locations.
  • Management moves increased the group’s gross profit margin, including fewer promotional activities, price markdowns and discounts for wholesale partners.

As a result, the first-half unaudited figures show a 9.9 per cent drop in revenue to $8.323 billion. However, the measures produced the intended improvement in profitability, with gross profit margin increasing by 2 per cent .

During the period, the group closed 9412 sqm of retail space, with coupled with the closure of 25,806 sqm in the previous six months represented a 11.1 per cent year-on-year reduction.

Asia Pacific retail, excluding online sales, at HK$951 million, fell by 21.5 per cent. Retail space was reduced by 18.5 per cent.

“It is important to note that in APAC we had the most drastic reduction of promotional activities and price markdowns,” says the company.

Esprit’s Eshop brought in 24 per cent of total group revenue, generating HK$1.993 billion, down by 2.4 per cent. However, there was a 58.7 per cent leap in revenue for Eshop APAC to HK$119 million.

China represented more than 80 per cent of the Eshop sales in the region. It recorded revenue growth of 54.9 per cent, fuelled by the integration of the Esprit Friends loyalty program, the strengthening of activities with Tmall, the expansion of its online presence through platforms such as WeChat and Weibo, and collaborations with celebrities and opinion leaders to enhance brand equity through social media.

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