• Net profit up to HK873m from $79m in prior year
  • Sales down 10.5% to $30.1bn
  • New CEO Jose Manuel Martínez Gutiérrez took helm today

Hong Kong based clothing retailer Esprit today (26 September) seen its share price drop despite recording soaring full-year profits.

The company, which is in the midst of a turnaround plan, said net income reached HK$873m (US$112.6m) over the year ended 30 June, up on the $79m recorded in the prior year. However, the result did not reach investor expectations, with the group's share price down 6.9% to HK$12.34 at the close of trading today.

Turnover dropped 10.5% in local currency to $30.1bn, which it attributed to a decline in both retail and wholesale turnover, amid the challenging operating environment. It added that the decision to close unprofitable stores, exit North America and rationalise wholesale operations also hit revenue.

New CEO Jose Manuel Martínez Gutiérrez took the helm of the retailer today, replacing Roland Van der Vis. His departure was announced in June.

Esprit is part-way through a turnaround plan devised by Van der Vis last year, which included makeovers of existing stores, new stores in China, as well as the exit of North America, closure of under performing stores, and a renewed focus on branding and sourcing. 

The company said the first collection under new chief product and design officer Melody Harris-Jensbach, which hit selected stores in July, achieved a sell-through which was more than double that of the other women's collections.

Looking ahead, the company said it will continue to focus on revitalising collections through its trend division, "China for China" lines, and the new wellness capsule collection featuring model Christy Turlington.

It will renovate more than 90 of its existing stores and 900 wholesale points of sale over the year, as well as open 40 full-price stores and over 20 outlets. It also plans to expand in china from the existing 1,013 points of sale in 191 cities, to 1,900 in about 400 cities by the 2014/15 financial year.

"As a result of the first year of the transformation plan, our operating profit in FY11/12 has grown despite the significant spending as part of the transformation plan and the challenging operating environment," said CFO Thomas Tang.

"Our collection is being invigorated and we are delivering an exciting new shopping experience in our refurbished stores. Together with the rest of the executive management team, we have laid the foundation for future growth and to enhance shareholders' value."