- Prachi Singh |
Esprit Group achieved a net profit of 21 million Hong Kong dollars (2.70 million dollars) for FY15/16, after reporting a net loss of 3,696 million Hong Kong dollars (476 million dollars) last year. The company has attributed the positive turnaround to a combination of improved retail sales performance, accelerated cost reduction, and net gains from exceptional items.
Commenting on the results, Thomas Tang, Group Chief Financial Officer of Esprit, said, “The results of the underlying operations visibly improved over last year and were better than expected. This improvement was driven by strong performance of our retail channels (offline and online), reduced cost of the operations and a favourable net tax balance this year. Moreover, preserving a strong financial position through prudent cash management continued to be a top priority during the year.”
Revenues declined marginally by 1.1 percent
Revenue of the Group was 17,788 million Hong Kong dollars (2,293 million dollars) in the financial year ended June 30, 2016, stable year-on-year with a slight decline of 1.1 percent in local currency. Due to unfavourable foreign exchange rate, principally the Euro currency, the decline in the revenue of the Group was 8.4 percent in Hong Kong Dollars terms.
Gross profit margin improved by 0.3 percentage points to 50.2 percent. The pressure from weakness in the Euro and slightly increased markdowns was offset by benefit from a higher proportion of retail (including e-shop) revenue. EBIT of the Group was a loss of 596 million Hong Kong dollars (76.8 million dollars). Excluding the exceptional items, the EBIT of the underlying operations was a loss of 572 million Hong Kong dollars (73.7 million dollars).
Esprit further banks upon its Strategic Plan for growth
“I am pleased to report that FY15/16 has been a positive year with improved financial performance and successful development of the most critical elements of our Strategic Plan. We are especially encouraged by the noticeable gain in the sales per square meter performance of our retail space and the sales growth achieved by our e-shops in FY15/16,” said Jose Manuel Martínez, Group Chief Executive Officer of Esprit.
Retail revenue, including e-shop grew 3.8 percent in local currency, despite a year-on-year reduction in retail net sales area of 10.9 percent, fuelled by sales growth in comparable stores of 8.1 percent. Retail revenue, including e-shop, in European countries grew even stronger at 8 percent, with comparable stores sales growth of 9.2 percent. E-shop, representing 23.3 percent of Group revenue, grew 15.3 percent.
In Germany, the Group’s largest market, comparable stores outperformed the market throughout the year virtually every month, by an average of 9.5 percentage points. From a product perspective, growth was driven by the Esprit Women product group and the edc product group, which reported comparable retail stores sales growth of 10.3 percent and 11.2 percent respectively. E-shop traffic from smartphone increased by 64 percent.