Esprit has appointed an internal task force to help the retailer ”regain competitiveness” after the company reported annual losses excluding exceptional items of HK$909m (£87.9m) for the year to 30 June 2018, up from a loss of HK$186m (£17.9m) in 2017.
Sales at the Hong Kong-based retailer fell 11.1% to HK$15.4bn (£1.5bn) in local currency terms for the year. The chain attributed the fall to the decline in the Hong Kong dollar against the strength of the euro, the impact from the group’s “strategic rationalisation of distribution footprint” to improve bottom line, and weaker than expected retail sales performance due to fall in footfall.
Esprit group chief executive Anders Christian Kristiansen said the company is addressing the issues.
“We have a fantastic opportunity to realize Esprit’s true potential. However, bold changes are needed to return Esprit to sustainable growth and profitability. We are currently affected by a combination of internal weaknesses. This includes a high cost structure which is no longer in line with the sales level, too many loss-making stores in our portfolio, a lack of clear brand identity, and product that doesn’t meet our customers’ expectations.
”I have appointed an internal task force that has been working closely with me to gather consumer insights, and establish possible strategic initiatives. The next step will be to map out execution plans. With what I have learnt in the last months, I am firmly convinced we have the right ideas to put Esprit back on track.”
The company will share its future strategy later in the autumn.
He added: ”The operating environment will likely remain challenging in the upcoming financial year with the fallout from the trade war and rising interest rates, which may weigh on consumer sentiment and spending. In our drive to regain competitiveness, we must sharpen our brand identity, improve our product offering with a focus on quality, and create an inspiring omnichannel shopping experiences for our customers. These efforts will be driven by the results of extensive consumer research to ensure that our brand, products and channels properly resonate with Esprit’s target customers.”