Esprit back to “slight profit” helps stock up 4 percent

ANALYSIS_ The Hong Kong-based fashion retailer benefited from the company´s announcement to be back to “slight profit” in the first half of the year. On the back of the news, Esprit's shares jumped 4.2 percent, becoming one of the main movers of the Hang Seng Index.

“This is very positive for the company,” Chris Zee, a Hong Kong-based retail analyst at HSBC Holdings Plc, said in a phone interview with Bloomberg. Zee estimates Esprit profit to come in at 70 to 100 million Hong Kong dollars for the first half.

Noteworthy

is the retailer´s loss of 465 million Hong Kong dollars registered in the period a year earlier, according to data compiled by Bloomberg.

Commenting the figures in a statement, the company explained that its forecast profit is backed up by reductions in operating expenses.

Esprit shares up on profit forecast for H1 2014

Profit forecast boosted Esprit shares to their highest in nearly two weeks on Thursday, cheering up a flat Hang Seng Index.

Despite the company expectations for a "slight profit" in the six months ending in June 2014, Esprit warned that its performance for the full financial year remained "uncertain" and reminded that, traditionally, the second half is weaker for their trading.

Esprit Holdings' Chief Executive Office, former Inditex's executive Jose Manuel Martinez Gutierrez, has been redoubling the group's efforts to revamp its stores, logistics and product offering in an attempt to regain market´s share.

According to Nomura´s analyst Tanuj Shori, Esprit has to keep track of consumer sentiment in Europe, especially Germany and France. “Their cost cutting measures are good, but eventually they have to focus on boosting revenue,” Shori told ‘Businessweek’.