Young fashion chain Esprit posted a 74% plunge in profits in its first half, yet the retailer beat expectations and said it is well on its way to recovery.
The company reported a net profit of HK$555m (£45.5m) for the six months to December 31, which although a large drop on the same period last year, beat analysts’ forecasts of between HK$391m (£32.1m) profit to HK$5m (£410,000) loss.
For the first half of the year wholesale revenue fell 11.7% with retail sales dropping by 1.1%. Turnover as a whole decreased to HK$16.70bn (£1.37bn) from HK$17.69bn (£1.45bn) in the comparable period. The retailer said its sales had been hit by European reduced consumer confidence and restricted credit facilities.
Esprit also said the high cost of raw materials has been an additional problem but it was now in the process of setting up sourcing offices in Indonesia and India.
The chain is currently undergoing a restructuring after its chief financial officer Chew Fook Aun resigned, however the company said its plans to restore long-term profitability were on track.
Esprit said: “Going to the second half of the financial year, we will continue the rigorous and systematic implementation of our transformation plan in a continued challenging business environment.”
The chain is focussing on international expansion and said it plans to double sales and points of sale in China by June 2015.
Esprit will however wind down its operations in North America by March 31, closing all its 90 directly managed stores there due to unprofitability.