Esprit issues profit warning based on first five months’ performance

Esprit Holdings Limited has issued a profit warning saying it’s set to make a loss for the bulk of the first half based on its assessment of unaudited figures.

It said that “based on the preliminary review of the unaudited consolidated management accounts of the group for the five months ended 31 May 2023 and information currently available to the board,” it’s expected to record an unaudited loss attributable to the shareholders of around HK$604 million (€70m/£60m/US$77m).

That compares to profit of HK$13 million for the whole six months that ended 30 June 2022. 

The statement issued via the Hong Kong Stock Exchange said the group is expected to record total revenue of approximately HK$2.509 billion for the five months, down from HK$3.626 billion for the six-month comparison period. 

Gross profit should also fall to around HK$1.126 billion for the period from HK$1.659 billion 12 months earlier.

The fall is “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”.

But the performance has also been affected by “short-term adjustments stemming from elevating Esprit’s brand positioning in the fashion industry”.

It has put in place a number of initiatives “to reinvigorate growth” over the past half year and estimates that they’ll “come to fruition in the second half of the year, and already since implementation there have been noticeable positive developments”. 

It also promised “many exciting developments coming up, including new product launches in Q3 starting with the new denim line in August”.

The company is still in the process of finalising its consolidated results for the period and the results for June 2023, which together comprise the first half of its financial year.