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Esprit issues profits warning ahead of store closures

Casualwear brand and retailer Esprit has warned that it expects a “substantial loss” in the second half of its financial year due to store closures and HK$2bn (£166m) goodwill costs related to its China business.

It will also incur charges of up to HK$300m (£24.9m)  for the closure of 16 loss-making stores, which it hopes will stem further losses long term. Its full year ends in June.

Revenue for the third quarter, to March  31, fell by 7.9% to HK$6.7bn (£557m) compared to the same quarter in the previous year. Comparable store sales decline narrowed, however, to 1.5% thanks to improved sales over the early Easter and aggressive promotional activity.

The wholesale division also saw a narrowing its losses to 9.6%, which is said was due to increased support although there was no further details.

The company, which currently gets 78.4% of its turnover from Europe, has been struggling for the past couple of years.

In February is posted an estimated first half loss of HK$465m (£39m) due to weak consumer sales.

In a statement with its third quarter results, the management team said it “remains committed” to working on short-term and  medium-term initiatives, including focus on product and “adapting and fine tuning” to market conditions where necessary.

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