Date
26 July 2017
Jose Martinez Gutierrez (left) and Thomas Tang  deliver the bad news at an Esprit results briefing Wednesday.  Photo: HKEJ
Jose Martinez Gutierrez (left) and Thomas Tang deliver the bad news at an Esprit results briefing Wednesday. Photo: HKEJ

Esprit loses HK$3.7 bln on poor sales, huge provisions

Esprit Holdings Ltd. (00330.HK) posted a net loss of HK$3.7 billion (US$480 million) for the fiscal year to June, the second full-year loss since the fashion retailer listed in Hong Kong in 1993.

The firm blamed a 19.8 percent drop in sales amid extraordinarily warm weather in Europe last year and non-recurring impairments and write-offs of HK$2.97 billion due to contractions in its business.

The write-offs include a HK$2.51 billion decrease in the goodwill of the firm’s China business, the Hong Kong Economic Journal reported Thursday.

Chief financial officer Thomas Tang Wing-yung said the write-offs and impairments will not have a material impact on the company’s operations and cash flow.

Esprit previously booked a loss of HK$4.4 billion for the fiscal year to June 2013, when it recorded HK$2.72 billion of non-recurring impairments and write-offs in addition to a combined HK$85 million in impairments for fixed assets and write-offs of outdated inventory.

It has booked a total of HK$6.54 billion of provisions in the past three fiscal years.

Chief executive Jose Manuel Martinez Gutierrez said the vertical integration model that was implemented in February to enhance sales has worked, and same-store sales from June to August expanded 4.1 percent.

Analysts said the new model has been well received, although more time is needed for the company’s business to turn around fully.

[Chinese version中文版]

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