Fashion group Esprit swings to $122 million net loss in first half

Fashion group Esprit Holdings Ltd swung to a net loss in the first half, hit by weak sales at its brick-and-mortar retail stores as it rationalized its distribution footprint, and goodwill impairment due to a decline in the China business.

The fashion group is in the midst of an ambitious multi-year revamp that has included store closures, price adjustments, and technology and distribution improvements.

“Given the weaker-than-expected sales performance in 1H FY17/18, we remain cautious about the expectations for the second half of this financial year,” the company said in a filing to the Hong Kong stock exchange.

The Europe-focused retailer on Wednesday reported a net loss of HK$954 million ($121.85 million) for the six months ended December, compared with a profit of HK$61 million in the year-ago period.
Revenue slid to HK$8.04 billion from HK$8.32 billion.

Esprit had in January flagged a net loss of up to HK$980 million for the July-December period.
Bigger rival Sweden’s H&M, the world’s second-largest clothes retailer behind Zara owner Inditex , has seen sales growth stall in recent years as it has struggled to adapt to the shift online and fend off increased competition from other budget brands.

Shares of Esprit have fallen 26.3 percent so far this year after a 31.4 percent drop in 2017. That compared with a 3.1 percent rise in the benchmark index so far in 2018.