Esprit says turnaround plan 'on track'

Agence France-Presse

Posted at Sep 26 2012 06:25 PM | Updated as of Sep 27 2012 05:20 PM

HONG KONG - Clothing retailer Esprit on Wednesday posted a sharp rise in its annual profit and said its turnaround plan was on track after selling its loss-making North American business.

Net profit for the year to June 30 jumped tenfold to HK$873 million ($112.59 million), from HK$79 million a year ago, Esprit said in a filing to the Hong Kong stock exchange.

Jose Manuel Martinez Gutierrez, new executive director and group CEO of Esprit, looks on during a news conference announcing the company's annual results in Hong Kong September 26, 2012./ REUTERS

Revenue fell 10.5 percent to HK$30.17 billion as "negative market sentiment", especially in Europe, hit the business.

Net income was boosted by a one-off write-back in provisions associated with the company's four-year transformation plan that began last year. The costs were less than expected and HK$696 million was added to the balance sheet.

"The group is very pleased to report that good progress has been made and the transformation plan is on track in driving the future growth and profitability of our business," Esprit said.

However, its Hong Kong shares fell 6.94 percent to close at HK$12.34 as the one-off sale made up the bulk of the firm's profit. The broader market ended down 0.83 percent.

Esprit -- founded in San Francisco in 1968 and headquartered in Hong Kong -- announced its exit from Spain, Denmark and Sweden to focus on Asian markets, especially China, after it reported a 98-percent plunge in net profit last year.

The company announced it would spend HK$18.5 billion over four years to close unprofitable stores and focus on growth.

Esprit was also hit by the sudden resignations of its chief executive Ronald van der Vis and chairman Hans-Joachim Korber in June, prompting concern over management stability.
It later appointed Jose Manuel Martinez Gutierrez, a former senior executive at Spanish clothing retailer Zara, as chief executive.

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