Esprit shares surge 33 percent as ex-chairman raises stake

HONG KONG - Shares of Esprit Holdings Ltd jumped as much as 33 percent on Thursday after its former chairman increased his holding in the Europe-focused fashion retailer, fuelling hopes he would play a bigger role in the company.

Esprit, which sells everything from bed sheets to jeans and generates three-quarters of its sales in Europe, performed well under the leadership of Michael Ying, who stepped down in 2008 as a non-executive director.

Ying increased his total holding in Esprit to 10.33 percent, including a rights issue, as of November 7, according to a Hong Kong stock exchange disclosure. He previously held 4.79 percent of the company.

"We believe investors' initial view will be positive, offering 'comfort' as Esprit performed strongly under his leadership," Deutsche Bank said in a research note.

"We have to monitor developments as to whether Mr Ying will be a passive or active investor."

Shares of Esprit, which has a market value of $2.7 billion, jumped to a six-month high of HK$14.08, outperforming a 1 percent drop in the benchmark index.

Ying was one of the founders of Esprit and steadily sold his stake in the fashion chain in the past few years to less than 5 percent before the latest share buy. He held a 30.8 percent stake in 2004.

Ranked as the 14th richest person in Hong Kong by Forbes this year, Ying is married to Taiwanese actress Brigitte Lin.

Esprit, which competes with and U.S. group GAP Inc and Japan's Fast Retailing Co Ltd, said last year that it would invest more than HK$18 billion ($2.3 billion) up to 2015 as part of its restructuring plan.

Also competing with Swedish clothing retailer Hennes & Mauritz and Spain's Inditex, Esprit posted a net profit of HK$318 million ($41 million) for its second half ended in June, compared with a HK$2.06 billion loss a year earlier, based on Reuters' calculations.

Reporting by Donny Kwok and Alison Leung