• Net loss reached HK$465m
  • Turnover fell 13.4% to $13.55bn
  • European turnover fell 9.1% 

Troubled Hong Kong-based fashion retailer Esprit has swung to a first half loss after reductions in operating costs failed to offset lower sales.

The company today (27 February) recorded a net loss of HK$465m (US$59.9m) for the half ended 31 December, against a net profit of HK$555m in the same period of the prior year.

Turnover declined 13.4% over the half to $13.55bn, against $16.69bn a year earlier. Excluding the impact of the disposal of the group's North American operations and store closure programme, turnover fell 8.8% in local currency to $13.3bn.

Europe, the company's biggest market, saw turnover decline 9.1% in local currency. In Asia-Pacific, turnover fell 7.2%, which it attributed largely to an 11.2% decline in local currency sales in China.

Retail sales were down 13% over the half to $8.1bn, while wholesale revenue fell 13.7% to $5.36bn. The company attributed the decline in retail sales to lower footfall, while the drop in wholesale turnover was attributed to customers experiencing "similar macro and company specific issues as the group's own retail operation".

"The group has made progress on various aspects of the business, including establishing a new product direction; creating more inspiring stores and fresh, stylish feminine collections; eliminating unprofitable distribution channels; and restructuring the sourcing department," said chairman Raymond Or.

"Moving forward, management will be very focused on the short-term and medium-term initiatives to revitalise the business.

"While recovery is not going to happen in the short term, I have strong faith that we will achieve our goals of restoring the group's long term sustainable growth and profitability."