Published
May 18, 2015
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Esprit publishes second profit warning of the year

Published
May 18, 2015

Esprit’s management has issued a profit warning based on the group’s unaudited consolidated accounts for the first ten months of its fiscal year, from July to April. CEO Jose Manuel Martinez and his colleagues expect significant losses for the company’s entire 2014/15 fiscal year, which ends on June 30.

Jose Manuel Martinez


This is the second warning in the span of just four months. Suffice to say that Esprit appears to have suffered particularly in April, as did Gap, for example. 

But Esprit is also facing a slowdown in the commercial property market. The 60 store closures (instead of the 50 initially planned) that are involved in the company’s restructuring program are taking much longer than expected to be finalized.

And thus, during its fiscal year so far, provisions have been estimated to be between 280 and 300 million Hong Kong dollars, or 33 million euros. Impairment of fixed assets of directly managed retail stores, meanwhile, is estimated at between 160 and 170 HK dollars. "The costs of the closures are higher. The later you close, the more expensive it is," said Martinez during a conference call.

Esprit also lost a great deal of money in restructuring its operations in China. The depreciation of its assets in China is between 2.5 and 2.7 billion HK dollars. At constant exchange rates, its business in China fell by 28.3% during its 13/14 financial year and 21.6% in the first half of its current year.  

That’s not to mention the unusually warm European winter, which led Esprit and its competitors to offer aggressive discounts to clear stocks. For 15/16, Martinez didn’t offer any forecasts. He will present the company’ annual results for its 14/15 fiscal year in September.   

Meanwhile, from July to March, the brand’s total sales fell by nearly 20% to 15 billion Hong Kong dollars (1.7 billion euros) and by 12.8% at constant exchange rates.

$1 HK = $0.13/£0.08

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