Esprit posts 11 percent revenue decline in FY17/18

Esprit Holdings Limited in its annual financial results for the year ended June 30, 2018, said that revenue of the group amounted to 15,455 million Hong Kong dollars (1,970 million dollars) representing a decline of 11.1 percent in local currency. The company said, decline in Hong Kong dollar terms was 3.1 percent less due to the strengthening of the euro against Hong Kong dollar during the year.

“Bold changes are needed to return Esprit to sustainable growth and profitability. We are currently affected by a combination of internal weaknesses. I have appointed an internal task force that has been working closely with me to gather consumer insights, and establish possible strategic initiatives. The next step will be to map out execution plans,” said Anders Christian Kristiansen, Group Chief Executive Officer of Esprit in a statement.

Hover over the graph to learn more.

Esprit witnesses weaker retail sales during FY17/18

The company added that this decline in revenue was the result of a combination of the impact from the group’s strategic rationalization of distribution footprint to improve bottom line, and weaker than expected retail sales performance due to decreased customers’ traffic.

The group recorded a gross profit of 7,921 million Hong Kong dollars (1,009.8 million dollars), which resulted in a gross profit margin of 51.3 percent. The decrease of 0.3 percent point in LCY, Esprit added, was mainly due to lower proportion of retail (excluding e-shop) revenue, which represents 40.4 percent of group revenue this year as compared to 42.1 percent last year.

In terms of profitability, Esprit said, the improvement in regular OPEX was not sufficient to outweigh the negative impact from higher than expected decline in revenue. As a result, LBIT of underlying operations (i.e. excluding the exceptional items) for FY17/18 was a loss of 909 million Hong Kong dollars (115.8 million dollars). Taking into account the significant negative impact from the exceptional items, the group recorded a net loss of 2,554 million Hong Kong dollars (325.6 million dollars).

Commenting on Esprit’s performance, Thomas Tang, Group Chief Financial Officer of Esprit, added: “Due to the worse than expected decline in revenue, net cash balance reduced to 4.5 billion Hong Kong dollars as at June 30, 2018. We are reassessing the best possible use of our cash in order to drive sustainable growth and profitability.”

Picture credit:Hartmut Schultz Kommunikation