Profit plunges 98% for clothing retailer

Hong Kong: Esprit Holdings, the biggest Hong Kong-listed clothing retailer, dropped the most in almost three years as profit plunged 98% on costs for closing stores and selling its US and Canada operations.

Net income plunged to HK$79 million (€7.2 million) in the 12 months ended June from HK$4.23 billion in the previous year.

“The brand has gradually lost its soul over the past few years,” Esprit said in a filing. “The heritage of the brand has been neglected and the company lost its customer focus.”

Esprit said it will focus its brand-building efforts in Germany, France, Belgium, the Netherlands and China after posting its third consecutive decline in annual profit. The casual clothing maker gets 79% of sales from Europe.

“If the brand is to recover, management needs to invest in the business, which means the earnings are not going to grow for a long period of time, say at least two years,” said Aaron Fischer, of CLSA Asia Pacific Markets in Hong Kong.