Aug 28, 2008
Esprit H2 profit up, but lags forecasts
Aug 28, 2008
HONG KONG (Reuters) - Esprit , the world's No.5 fashion retailer, lagged forecasts with a 12.5 percent rise in second-half profit, as waning consumer sentiment in its core European market offset a strong euro and sales growth elsewhere.
Esprit, which is fighting for a larger share of Asia's booming fashion markets and invests up to $40 million annually to expand in North America, had been in the market for acquisitions, especially of a premium brand.
But executives told reporters on Wednesday the retailer will hold off on from any acquisitions because of lingering uncertainty over the outlook for global economic growth.
Esprit, which competes with Hennes & Mauritz , Benetton and Gap , derives nearly nine-tenths of its revenue from Europe and half its turnover from Germany alone.
It is pushing into developing markets such as China, where it runs a venture with China Resources Enterprise Ltd , and Eastern Europe, hoping to drive future growth.
German business and consumer morale has hit multi-year lows as Europe's biggest economy shrank in the second quarter, raising the spectre of recession. [nBAE001352]
Esprit, which sells everything from bath towels to shoes, posted January-June net profit of HK$3.15 billion ($404 million), up from HK$2.8 billion a year ago, missing an average estimate of HK$3.44 billion from 17 analysts polled by Reuters Estimates.
Shares in the retailer lost more than 30 percent in January-June as investors predicted consumers would spend less due to a weaker U.S. economy. Hong Kong's benchmark Hang Seng Index .HSI fell 20.5 percent during the same period.
In July, Esprit said its deputy chairman and group chief financial officer John Poon resigned to pursue other interests.
For full earnings statement, click here 80827203.pdf
British clothing retailer Next Plc last month posted a 6 percent fall in first-half underlying sales, in line with forecasts, and said it expected a similar decline in the second half.
Rival Marks & Spencer posted a 6.2 percent drop in like-for-like clothing and homeware sales in the 13 weeks to June 28. Same-store sales at discount chain Primark were close to flat in the 16 weeks to June 21.
(Writing by Joseph Chaney, Editing by Ian Geoghegan)
By Parvathy Ullatil
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