Esprit’s quarterly sales fall by over 25%

By

Bruno Joly

Published
May 6, 2015

Esprit has suffered the consequences of last year’s unusually warm European winter as well as currency fluctuations. Thus, according to preliminary results, during the third quarter of its fiscal year running from January to March, the retail brand saw its sales fall by over 25% to 4.5 billion Hong Kong dollars, or 519 million euros. At constant exchange rates, the decline was limited to 12.2%.

In Germany, its biggest market, sales at constant exchange rates decreased by 11.4% to 2 billion Hong Kong dollars, or 231 million euros. Its retail business in the country was down by 9.7% and wholesale by 13.7%. In other European countries, the brand, whose presence is primarily focused on Benelux, France and Scandinavia, fell by 17.8% to approximately 1.6 billion (184 million euros), while its wholesale business fell by 22% at constant exchange rates. 

According to the company, its poor performance can be explained by several factors, including aggressive discounting to clear inventories that remained unsold due to the unusually warm European winter. There were also reductions to its retail network as part of efforts to reorganize. Thus, in one year, its retail network saw 16 fewer locations in Germany, four fewer in other European countries and 20 fewer in Asia. The case was similar for franchises. On March 31, for example, Esprit had 574 franchise stores in Europe (excluding Germany), or 104 fewer than one year earlier, its franchise sales area falling by 21.5%.  

Finally, the third quarter saw the brakes put on its return to short-term growth, although Jose Manuel Martinez, the company’s CEO since 2012, has justifiably referred to a return to like-for-like growth. From July to March, the brand’s total sales fell by nearly 20% to 15 billion Hong Kong dollars (1.7 billion euros) and 12.8% at constant exchange rates.