Hong Kong-listed fashion label Esprit is on course to achieve its second consecutive profitable half year in five years – although the company has suffered from unfavourable exchange rates and other challenges during the latest period.
In a profit warning filed with the Hong Kong Stock Exchange, Esprit Holdings chairperson Christin Chiu said that based on a preliminary view of accounts, the company would record a profit of about US$1.66 million in the six months to June 30. That is down considerably from the $15.4 million for the same period a year earlier but still in the black.
Sales fell about 6 per cent to $462 million, primarily due to the depreciation of the Euro against the Hong Kong dollar. A majority of the brand’s sales are in Europe. Had the exchange rate remained the same, the company said it would have expected to record an increase in sales of about 2 per cent.
Esprit has spent the past five years undertaking a massive restructuring program that included the short-term bankruptcy proceedings of its German subsidiary, the relocation of its head office to Europe (and subsequent return to Hong Kong), an executive shakeout and a revamp of its product strategy.
The company is now on the brink of reopening stores in key Asian markets and has indicated it is moving the brand into a more premium space from the fast-fashion genre with which it has been connected in the past.
Chiu said that through the remainder of this year the company will focus on initiatives to drive sales, enhance operational efficiency, improve inventory and receivable management, and – while paying attention to the fading effects of the pandemic – optimise its cost structure.
Final audited results will be published around August 30.