The clothing manufacturer Esprit is making losses again. The reason for this is falling sales due to restrained consumer sentiment in the main market, Europe.
The loss in fiscal 2022 could total as much as HK$700 million (EUR 83.7 million), Esprit Limited Holdings said in a profit warning on Friday. According to the preliminary figures, the group is slipping back into the red.
In the 2021 financial year, a profit of around 381 million Hong Kong dollars (45.6 million euros) was recorded.
Falling yields
Esprit sees the reason for the loss primarily in the decline in sales. Compared to 2021, sales fell by 15 percent to 7.06 billion Hong Kong dollars (840 million euros). The triggers were the Ukraine war, rising interest rates and energy costs, which made people in Europe more cautious about their clothing purchases. Added to this were higher costs for logistics.
The falling earnings also hurt gross profit, which fell to HK$2.88 billion (EUR 340 million) from HK$4.04 billion.
The figures contained in the announcement are still based on a preliminary assessment of the unaudited consolidated financial statements of the group for 2022. The final financial figures are to be published at the end of March.
profits collapse
Already in the interim report for the first half of 2022, things were not looking good for Esprit. In the months from January to June, group sales amounted to almost 3.63 billion Hong Kong dollars (461 million euros), which corresponded to a decline of 6.4 percent compared to the previous year. Net profit fell 89 percent from 121 to 13 million Hong Kong dollars (1.65 million euros).