Esprit: turnaround plan pays off

HONG KONG - Esprit Holdings Ltd said on Friday it had swung to its first profit in a year after its new chief executive introduced a plan to cut costs and revamp its supply chain.

The clothing retailer made a net profit of HK$95 million ($12.25 million) in the six months ended Dec. 31, compared with a loss of HK$465 million for the same period a year earlier.

The company last made a profit in the period ending June 2012.

Chief Executive Jose Manuel Martinez Gutierrez, who joined Esprit from rival Zara in 2012, has been fighting to revamp the retailer's business model to match Zara's successful fast-fashion model.

Martinez has hired other Zara veterans and unveiled technology and distribution upgrades that will halve the time it takes to get clothes designed, manufactured and in stores.

Esprit, which forecast a first-half profit last month, also repeated a warning that the second half of the year is typically weaker and that the business environment remains challenging.

It said it expected a further decline in turnover, which fell to HK$12.81 billion in the first half, down from HK$13.55 billion in the same period last year.

Esprit shares were down 1.65 percent in early afternoon trade on the Hong Kong Stock Exchange. The shares have lost about 4.4 percent this year compared with a roughly 3.5 percent decline in the benchmark Hang Seng Index.

$1 = 7.7556 Hong Kong dollars