Esprit, the seventies apparel label trying to make a comeback targeting Gen Z consumers, is back in the red.
The company is blaming Russia’s invasion of Ukraine for a decrease in sales in Europe and denting consumer sentiment in the region.
In a profit warning filed with the Hong Kong Stock Exchange the company warned shareholders that based on unaudited figures for the five months to May 31, the company expects to lose US$77 million. That compared with a profit of $1.66 million over the six months to June 30 of last year.
Expected revenue has dropped from $463 million to $320 million over the same period.
“The decrease in revenue was primarily due to negative consumer sentiment in Germany and across the rest of Europe resulting from the poor economic environment and the continuing conflict in Ukraine,” said chairperson Christin Chiu. “The company’s performance was also affected by short-term adjustments stemming from elevating Esprit’s brand positioning in the fashion industry.”
Last full year, Esprit reported a profit of US$48.7 million on sales of $1.06 billion, thanks to a 7 per cent increase in gross margin.
On a positive note, said Chiu, the company has “implemented multiple initiatives to reinvigorate growth over the past half year” which it says should pay off in the second half of the year.
“…Already since implementation, there have been noticeable positive developments. Furthermore, there will be many exciting developments coming up, including new product launches in Q3 starting with the new denim line in August 2023.”
Esprit says it will release its final results before the end of next month.
