Half A Year Net Loss Of 1 Billion 800 Million Esprit Failed To Recover

In the past few years, Esprit's global restructuring and restructuring has not been able to recover successfully, and the new round of restructuring started from this fiscal year has made the apparel retailer again record a huge net loss of HK $1 billion 773 million.

Esprit frequently appeared in the TVB fashion show in Hongkong in the early years. It is familiar with and popular to the people of Hongkong and Hongkong. After entering the mainland market, the brand was also popular in the first tier cities in the late 1990s and early 2000s. But with the entry of international brands into the mainland market, Esprit and many other casual wear brands are no longer in sight.

Executive Chairman Ke Qinghui said at today's performance press conference that if the exclusive cost of HK $1 billion 418 million was excluded from the restructuring, the interim performance was not the worst in history.

In November 2018, investors' Day event, Esprit Si Jie global said it would allocate HK $15-17 billion in one-time expenditure this year to restructure the group structure and speed up the elimination of loss business, thereby greatly reducing the cost base. At the same time, by strengthening the brand and optimizing products, it would strengthen sales and push the group to break even in two to three.

In its mid-term performance report, the group pointed out that the strategic plan is "progressing well as expected". Ke Qinghui disclosed that half of it has been completed. Chief executive Anders Kristiansen stressed to reporters that "brand repositioning and product changes to attract customers back to stores will only take effect".

In the 2019 half year of fiscal year ending December 2018, Esprit's global revenue plunged 15.8% to HK $6 billion 766 million.

According to local currency, the decrease was 14.4%, and the German market, which accounted for more than half of the group's revenue, fell by 13.9% compared to the same period, while the same store sales also dropped by 10.7%.

Income and 38.3% of other European and American income and same store sales decreased by 11% and 9.1% respectively.

The Asia Pacific region contributed 10% of the revenue to the group, which resulted in a sharp reduction in the sales area by 27.9% due to the restructuring strategy of the stores. The interim revenue also fell by 26.6% to HK $698 million and the same store sales decreased by 2.5%. The 16.6% and 11% growth respectively achieved by Hongkong and Singapore failed to offset the 14.2% decline in mainland China due to the decrease in the volume of passenger traffic and promotional activities.

Esprit's 27.4% revenue came from electronic stores, which accounted for 96.2% of the European market. Sales in the region declined by 8.7%. Asia Pacific region also dropped 32% due to withdrawing from some markets and Tmall flagship stores.

During the first half of the year, Esprit Sijie ended business in Australia and New Zealand, and other stores closed down in Hongkong.

As of December 31, 2018, the group had 495 direct managed stores worldwide, a net decrease of 141 stores over the same period last year, of which 131 were located in the Asia Pacific region.

Ke Qinghui pointed out that the group will continue to open stores when it closes its loss stores, and with the group moving the regional design, sales and marketing teams from Hongkong to Shanghai in order to get closer to the key Chinese market, and with management continuing to bullish on China's huge development space and the growth potential of the middle class, Esprit still intends to expand selectively in China and consider expanding the two or three line cities while continuing to develop e-commerce. "As for the past six months, Hongkong, which is" well performing ", does not rule out new shops again.

Ke Qinghui said the pfer of manpower to Shanghai has nothing to do with cost.

By the end of June, the global front line staff of Esprit will shrink 35%-40% by the end of the financial year.

The gross profit margin in the medium term decreased to 51.3% from 52.9% in the previous year, mainly due to increased investment in product quality and higher discount level. The management pointed out that the two quarter decline was much lower than the first quarter, showing a positive development.

Regular recurrent expenditure has been reduced by 11.9% to HK $3 billion 803 million from a year earlier, due to strict operating standards and cost savings resulting from restructuring. However, it is still not enough to offset the negative impact of income retrogression. The adjusted EBIT of basic business has expanded to HK $-1.36 billion over the previous year's HK $HK $100 million.

As of December 31st, Esprit had no liabilities, net cash fell by 19.6% to HK $3 billion 635 million per year, and the stock balance decreased by 12.7% to HK $2 billion 440 million.

Looking forward to the future, management will maintain the expected revenue growth in the 2021 fiscal year. In the medium term, the guideline for the 2019-2024 fiscal year's annual growth rate with median high digits in local currency will remain unchanged.

Specific targets and strategic measures will be adjusted according to key performance indicators such as passenger flow, sales rate, Ping efficiency, same store sales growth and sales cost ratio.

0330.HK, which closed at HK $2.04 on Tuesday, fell by 0.97% throughout the day. Its stock has soared 33.3% since 2019, compared with a 62.7% decline in 2018 and a 11.3% increase in the index.