Esprit's annual revenues decline by 12.9 percent

Impacted by the group’s decision to close unprofitable stores and resize the retail store footprint which led to a year-on-year reduction in total controlled space of 14.3 percent and exceptional items totalling 1,493 million Hong Kong dollars (190.7 million dollars), Esprit Holdings Limited reported revenue decline of 12.9 percent excluding the effect of foreign exchange to 12,932 million Hong Kong dollars (1,652 million dollars). The company said, in terms of profitability, pressure from revenue decline was outweighed by successful reduction in regular OPEX. The results showed an underlying LBIT of negative 587 million Hong Kong dollars (74.9 million dollars) before exceptional items, compared with negative 909 million Hong Kong dollars in the previous fiscal.

“Our goal for FY19/20 is to continue our transformation journey, implementing the Strategy Plan consistently but rapidly, and continually refining it whenever deemed necessary. Barring unexpected circumstances, we are on plan and on track to achieve our target of EBIT breakeven by FY21/22. The plan is ambitious, and times are challenging, but with the concerted efforts and passion from all our employees, as well as with the continued support from other stakeholders, I have full confidence that Esprit will succeed,” said Anders Christian Kristiansen, Executive Director and Group CEO of Esprit in a statement.

Esprit’s performance across core geographies The company said, Germany, the largest market of the Group, accounted for 51.7 percent of total group’s revenue, recorded revenue of 6,687 million Hong Kong dollars (854 million dollars), down 10.4 percent in LCY. In terms of distribution channels, Germany retail excluding eshop recorded revenue of 2,226 million Hong Kong dollars (284 million dollars), a decline of 12.8 percent in LCY, while comparable store sales declined 6.3 percent in LCY. Germany wholesale excluding eshop recorded revenue of 2,200 million Hong Kong dollars (281 million dollars), a decline of 12.3 percent in LCY.

Rest of Europe comprises countries in Europe except Germany but includes America and Middle East accounted for 38.8 percent of the group’s total revenue. The region recorded revenue of 5,012 million Hong Kong dollars (640 million dollars), representing a decline of 9.5 percent in LCY. Rest of Europe retail excluding eshop recorded revenue of 1,805 million Hong Kong dollars (230.5 million dollars), representing a decline of 7.6 percent. Rest of Europe wholesale excluding eshop recorded revenue of 1,754 million Hong Kong dollars (224 million dollars), down 15.5 percent in LCY.

Asia Pacific (APAC) comprising mainly China, Singapore, Hong Kong, Malaysia, Taiwan, Macau, Thailand, India, Myanmar and the Philippines, accounted for 9.5 percent of the Group’s total revenue. The region recorded revenue of 1,233 million Hong Kong dollars (157.4 million dollars), a decline of 33.2 percent in LCY. Asia Pacific retail excluding eshop recorded revenue of 1,003 million Hong Kong dollars (128 million dollars), a decline of 34 percent, mainly due to reduction in net sales area of 35.5 percent and a decline in comparable store sales of 6.2 percent. Asia Pacific wholesale recorded revenue of 99 million Hong Kong dollars (12.6 million dollars), a decline of 12.1 percent. Global Eshop channel generated 3,728 million Hong Kong dollars (476 million dollars) in revenue, a decline of 6.6 percent in LCY. Eshop Europe (Germany and Rest of Europe) revenues declined 4.8 percent, while Eshop APAC revenue dropped 38.2 percent.

The group anticipates a low-double-digit percentage decline in revenue in FY19/20. In terms of margin, Esprit aims to achieve a slight improvement yoy increase in gross profit margin mainly through having less discount while keeping retail price stable. As for regular OPEX, the Group expects a high-single-digit percentage reduction.

Picture:Facebook/Esprit