Esprit expects to report net loss in H1 on declining sales

Esprit Holdings Limited, based on its preliminary review of the unaudited results of the company for the six months ended December 31, 2017 has announced that management currently expects to record a net loss in the range of approximately 950 million Hong Kong dollars to 980 million Hong Kong dollars (121.5 to 125 million dollars), as compared to a net profit of 61 million Hong Kong dollars (7.8 million dollars0 in the same period last year.

The company added that the anticipated net loss is attributable to full impairment of the remaining balance of the China Impairment, due to the significant decline of Esprit business in the country in recent years, larger than expected decline in the group’s revenue in the second quarter against an expected modest decline and net taxation expense of approximately 5 million Hong Kong dollars (0.6 million dollars) in 1H FY17/18 in contrast to the net taxation credit of 74 million Hong Kong dollars (9.4 million dollars), in the same period last year.

As a result of second quarter performance and China impairment, the company said LBIT is estimated to be in the range of approximately 150 million Hong Kong dollars to 180 million Hong Kong dollars (19 to 23 million dollars) for 1H FY17/18, compared to 13 million Hong Kong dollars (1.6 million dollars) in the same period last year. Slight increase in gross profit margin and reduction in operating expenses in 1H FY17/18, Esprit said, were not sufficient to outweigh the negative impact of the revenue decline during the period.

The Esprit board added that the group is currently in the midst of fine tuning its strategic measures to establish a solid platform for long term profitable growth; the operating environment continues to be very challenging amidst rapidly changing industry dynamics; and due to the seasonality of the business, the performance in the second half of a financial year is normally not as good as the first half, hence, the financial performance of the Group in the second half of FY17/18 remains uncertain.

Picture:esprit website