Fashion retailer Esprit posted a 17 percent drop in sales and a loss in the first half of the year, but expressed confidence in its ongoing turnaround strategy.
The Hong Kong-based company generated revenue of HK$3.03 billion in the six months ended June 30 as it faced “adverse conditions” and a “series of progressive initiatives to revitalize growth”, Esprit announced on Monday. During the same period, the company posted a net loss of HK$714 million (EUR 84.2 million) compared to a profit of HK$13 million (EUR 1.5 million) a year earlier. The deep red numbers in the first half of the year are not surprising, since the company had already published the first figures for the period from January to May in July.
After a long period of stagnation, Esprit has changed significantly in recent years. In the past two years, the company has relocated its headquarters back to Hong Kong and decided to reshuffle its leadership team, including a new CEO, CFO, chief product officer and chief digital and marketing officer.
Persistent headwind
The company said it has faced a number of difficulties, including disruptions in international supply chains, rising commodity prices, falling consumer confidence and reduced spending on consumer goods.
The company noted that consumer confidence and spending by German and European consumers continued to be constrained in the first half of the year due to the ongoing conflict in Ukraine, as well as high inflation and high interest rates. However, it said there were “a number of “progressive initiatives” which management expects to materialize in the second half of 2023 after seeing “tangible positive developments from June results”.
These actions include cost reduction measures through corporate restructuring, the closure of unprofitable stores, outlets and store downsizing, the discontinuation of product lines with low gross margins, and investments in restoring and enhancing Esprit’s brand image.
Looking ahead, the company said it specifically identified North America as a focus for future expansion to diversify the business. In addition, the presence on the Asian and European markets is to be further strengthened in order to help Esprit regain its original, upscale and globally recognized brand position.
This translated and edited post previously appeared on FashionUnited.uk.