Revenue drop no surprise for Esprit Holdings

Esprit revenue fell 8.4 per cent during the third quarter, but the apparel retailer says this was expected as part of the execution of its strategic plan.

It says the primary focus is on improving its bottom line through a combination of closing unprofitable spaces, cutting back on promotional activities and price markdowns, and further streamlining of operating costs.

“We are conscious that this downsizing approach leads to a decline in revenue in the short term,” says the company, “but overall performance remains in line with management expectations.”

Group revenue for the third quarter, ended March 31, amounted to HK$3.888 billion (US$499.6 million), but the decline was less than the 11.8 per cent corresponding reduction in total controlled space. The group closed 4408 sqm of retail sales area during quarter.

Retail (excluding e-shop) revenue was HK$1.502 billion for the quarter, a year-on-year decline of 14 per cent. E-shop sales rose 3.8 per cent to HK$983 million.

Esprit says its growth momentum in China has continued, with revenue rising 39.9 per cent, while for the rest of the Asia Pacific the increase was 12.7 per cent. The growth was fuelled by the roll-out of the group’s omnichannel plan as well as by strategic partnerships with key online retailers including Tmall for China, or Lazada and Zalora for Southeast Asia.

“Moving forward, the continued closure of unprofitable space will put pressure on revenue development, so we have started to seek opportunities to drive future growth, which may include store openings in selected markets, new product lines, an ambitious campaign to leverage on the 50th anniversary of the brand next year, and the possibility of entering new markets,” says the company.


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