Esprit warns of significant annual loss

Apparel group Esprit Holdings Limited has concluded fiscal year 2024 with substantial losses. However, according to current findings, the deficit was not as high as in the previous year. This was revealed in an interim statement released by the company on Wednesday.

Net Loss Decreases to Approximately €144 Million

The past fiscal year was marked by insolvency proceedings for numerous regional subsidiaries in Europe and the US, as well as the transition of the business model to a license-based structure.

Due in part to the temporary deconsolidation of the subsidiaries affected by insolvency proceedings, annual revenue decreased by 73 percent to 1.59 billion Hong Kong dollars (€196 million), according to the preliminary, unaudited figures. Gross profit shrank by 76 percent to 591 million Hong Kong dollars.

Management now anticipates a net loss attributable to shareholders of approximately 1.17 billion Hong Kong dollars (€144.5 million) for 2024. In the previous year, the loss amounted to 2.34 billion Hong Kong dollars.

Extraordinary Items Influence Earnings Performance

The development was primarily driven by extensive positive and negative extraordinary items. The group announced that the deconsolidation of its subsidiaries reduced the loss by 3.07 billion Hong Kong dollars. Furthermore, operating costs decreased by 2.195 billion Hong Kong dollars. Conversely, the company had to recognize impairments totaling 2.04 billion Hong Kong dollars and establish provisions for inventory and other write-downs amounting to 1.27 billion Hong Kong dollars.

However, management emphasized that the shift away from the previous capital-intensive business model towards a lean, license-based strategy has "better positioned" the group to "maximize the monetization of the global Esprit brand sustainably." The company plans to present its complete results for 2024 at the end of March.