Esprit's net profit slumps by half amid 'complicated and uncertain' outlook

Fashion retailer Esprit faces a "complicated and uncertain" outlook, chief executive Jose Manuel Martinez Gutierrez said yesterday as the firm posted interim profit that halved, hurt by a late winter in Europe and the buy-back of old inventory from wholesale partners in China.

Net profit for the half to December was HK$47 million, down from HK$95 million the year before, while turnover dropped 16.3 per cent to HK$10.71 billion.

"Frankly, in the first half everything that could've happened, happened. There was 30 and 40 degree weather in October in Germany. Nobody buys outerwear," Gutierrez said.

While a late winter resulted in heavy product discounts, the returning of old stock in China also dragged on revenue but management assured that it did not expect the same problems with its new collections.

The company, with dual headquarters in Hong Kong and Germany, has worked over the past few years to turn itself around. Last June, it posted a profit of HK$210 million for its fiscal 2013-14 year, recovering from a loss of HK$4.4 billion a year earlier.

However, Gutierrez said he expects substantial volatility in the short to medium term, with a low single-digit decline in retail space this year as loss-making stores are shut. "We are operating much better than we did six months ago," he said.