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Esprit profit soars despite revenue dip

Esprit profit soars despite revenue dip

Esprit Holdings saw a three-fold rise in full-year profit on the back of slimmer operating costs, despite an overall dip in revenues for the twelve months.

Esprit reported a net profit of HK$67 million ($8.6 million) for the year ended in June 2017 from HK$21 million a year earlier.

SEE ALSO : Esprit restructures its marketing division

The Hong Kong-based clothing retailer in August 2017 forecast a net profit in the range of HK$50 million to HK$80 million for the full year.

For the last financial year, Esprit set out on a major revamp that included store closures, price adjustments, new return policies, and technology and distribution upgrades – all attributing to the profit surge.

“As a result of our team’s intensive efforts, we successfully achieved reduction of operating costs this year by $1 billion Hong Kong dollars, one year ahead of targeted schedule,” said chief financial officer Thomas Tang. “We aim to leverage our reduced cost base to further improve our profitability in the future.”

The company forecast retail space to decrease by single digits in percentage terms in the new financial year, with revenues down slightly.

However, the retailer forecast an improvement in gross profit margin as it continues to cut down on discounts and promotions. Operating expenses are expected to come down by single digits in percentage terms.

SEE ALSO : Esprit looks to open physical stores in India

“Growth will only come progressively as the group still faces a downsizing process in its wholesale and retail space (as loss-making retail stores still need to be closed),” Esprit said in a statement.

Esprit operates in 40 countries through 660 directly managed retail stores and more than 6,000 wholesale accounts.