Esprit is now embarking on the "growth" phase of its turnaround plan

Esprit is now embarking on the "growth" phase of its turnaround plan

Hong Kong-listed fashion brand Esprit swung to a loss during what it described as an “exceptionally challenging” year, weighed down by currency headwinds and China woe - but says it is now entering the "growth" phase of its turnaround plan. 

The company's net loss amounted to HKD3.70bn (US$477.4m) for the 12 months to 30 June, compared to a profit of HKD210m in the same period of the prior year.

Turnover declined 19.8% to HKD19.4m from HKD24.2m last year, due to an 8.8% reduction in total controlled space and the unusually negative market development in Europe.

In Asia Pacific, deceleration of growth in China’s economy broadly impacted consumer spending in the region. In addition, the significant depreciation of the euro against the Hong Kong dollar placed considerable pressure on the group’s financial results.

Gross margin dropped to 49.9% from 50.2% last year.

Although the period was “exceptionally challenging”, the group said it has been a year of “significant achievement” as it completed the most vital and demanding phase of its turnaround plan. Esprit added that it is encouraging to see the first signs of a positive sales trend for its new “vertical products”, produced through its faster and more cost efficient product development and supply chain processes. This, it says, suggests it is on the right track to restoring the brand's competitiveness.

It is now entering the “growth” phase of its strategic plan, and expects to see an increase in productivity of its controlled spaces to be driven by enhanced products and channel operations.

“The growth phase that we are now embarking upon is not without its challenges, but there is much hope and excitement across all levels of our organisation as we leverage the strong foundation that we have laid over the last two years,” said chairman Raymond Or. “Every successful journey takes time, and we believe that we are nearing our final destination – which is to restore the long term competitiveness of our group.”