Afternoon:
14°c
Esprit puts brake on European expansion
Bill Condie05.02.09
Fashion firm Esprit is cutting back on expansion in Europe as the recession bites.
The Hong Kong-based firm, with a flagship store in Regent Street and a big outlet in Kensington High Street, makes 80% of its sales in Europe but has posted its first loss in more than 10 years. Net profit fell 13% to HK$2.8 billion (£250.5 million) in the six months to December, with its profit margin squeezed to 17.9% from 21.7%.
"I'm quite surprised by the sharp fall in the bottom line," Fiona Wong of Hong Kong's Sun Hung Kai Securities told Bloomberg. "I doubt there's any more growth, as the whole consumer market is shrinking rapidly."
Chairman Heinz Krogner is battling weakening demand, particularly in Germany, where Esprit made about 50% of its HK$19.1 billion first-half sales. While the retailer will continue to open new stores, it will slow expansion in markets where its brands are less well-known, Krogner said.
