2014: Light at the end of the tunnel for Esprit?

ANALYSIS_ 2014 might be a better year for struggling Hong Kong-based Esprit, as the fashion retailer expects to get out of the red at some point next year. Esprit net loss stands at 4.39 billion Hong Kong dollars after its fiscal year’s

revenue fell 14.1 percent to 25.9 billion Hong Kong dollars.

In an interview with the German journal Frankfurter Allgemeine Sonntagszeitung, Esprit’s Chief Executive Jose Manuel Martinez shared his hopes for 2014 to be a good year for the company he leads. "I expect that we will soon - maybe even next year - no longer be loss making," Martinez advanced.

“Today we focus fully on Esprit’s core business and the licenses that are close to our brand, for which we have expertise. Things are moving again in the right direction,” the top executive at Esprit added.

Esprit to leave red behind in 2014

For the current 2013/14 fiscal year, Esprit has forecast a further decline in turnover, partly due to store closures, but expects cost cuts will help reduce its operating expenses-to-sales ratio below 50 percent from just over 65 percent in the previous year.

“You cannot expect us to suddenly grow after years of shrinking (by 10 percent). This does not work. Currently, we do everything we can to stabilise the business. Growth is then the next step - perhaps in two or three years,” summarised Martinez for the Frankfurter Allgemeine Sonntagszeitung the direction the company is heading to.

Esprit’s CEO, who joined in 2012 highlighted that “Under high pressure, we are working to make the brand more attractive. We want to be faster and strengthen our quality. The high brand awareness and Esprit’s positive image are the foundation on which we can build” the future.

Martinez, who stepped in to a warm welcome by the market - Esprit's stock marked its main one-day gain in fourteen years after the appointment was made public – has shown in his previous appointment with Inditex that he is highly capable to live up to such a challenge.

Focus on improved products and renewed sales strategy

"We are mostly focusing now on improving all of our products' design and value for money, rather than on rethinking our sales strategy," Martinez told Reuters this week.

Aimed to do so, Martinez has poached quite a handful of Zara’s veterans and unveiled upgrades to technology and distribution to help his new hires get clothes designed, manufactured and on the racks in three to four months from the current seven to eight, reported Reuters.

"Our business figures are extremely far from our goals and expectations," he recognised in a letter to shareholders in Esprit's last annual report.