Esprit Holdings has plunged back into the red, set to lose almost twice as much this year than it made last year – which was the first in five it had been profitable.
In a warning to shareholders filed with the Hong Kong Stock Exchange on Friday, Esprit blamed the war in Ukraine, heightened supply-chain costs and inflation for its dismal performance.
On sales down 15 per cent to HKD7.063 billion (US$900 million) Esprit estimates a loss attributable to shareholders of up to 700 million ($89.2 million)
Audited results are scheduled for release at the end of the month.
Last year, Esprit reported a profit of US$48.7 million on sales of $1.06 billion, thanks to a 7 per cent increase in gross margin.
In a statement released at the time, the company said the turnaround was also due to infrastructure and strategies adopted by the new management team, cost-control measures, improved inventory management, and growth in online sales. Some strategic functions were relocated from Germany to Hong Kong, where the company is listed and its senior management team is currently based.
Last year the company commenced work on a new research and development hub in New York where the company will relocate its brand headquarters, after relocating from Germany to Hong Kong in 2021.
In Friday’s filing, Esprit said inflation, energy prices and their impact on supply chain costs, and Russia’s invasion of Ukraine had “severely damaged consumer confidence and dampened consumer spending appetite” – particularly in Europe where the group primarily operates. While the company has been talking up its prospects in recent months as it looks to reconnect with a lost generation of customers, it is still struggling to engage with younger fashion-conscious shoppers. Earlier this year it was promoting unisex cricket jumpers to Gen X.
