3 Min Read
* H1 net profit HK$61 mln vs loss of HK$238 mln year ago
* Revenue slips, interim dividend skipped (Adds details of results and company comments)
By Donny Kwok
HONG KONG, Feb 22 (Reuters) - Esprit Holdings swung to a first-half profit from a loss in the year-ago period as the clothing company trimmed operating costs, but weak consumer demand due to a slowing Chinese economy and tough online competition hurt revenue.
The Europe-focused retailer is in the midst of an ambitious multi-year revamp that has included store closures, price adjustments, new return policies, and technology and distribution improvements.
Esprit has been actively restructuring its retail footprint and reduced promotional activity in Asia Pacific amid lower consumer traffic in the region, while unusually warm weather in Europe also affected its sales.
The company said on Wednesday it posted a net profit of HK$61 million ($7.9 million) for the six months ended in December, compared with a net loss of HK$238 million for the same period a year earlier.
Revenue for the period was HK$8.32 billion, down from HK$9.3 billion a year earlier. Esprit said it is not paying an interim dividend for the half-year.
"The economic growth slowdown in China has dampened consumption sentiment, resulting in reduced traffic to the malls across the region, including shopping and tourist destinations that are key for Esprit," the company said in a statement to the Hong Kong stock exchange.
The closure of unprofitable stores, with China accounting for a large chunk of the reduction, was fundamental in order to improve the results of the group, it said.
Going forward, Esprit said it aimed to continue executing its strategic plan with a primary focus on improving the company's bottomline.
Last week, Swedish budget fashion retailer H&M reported an 8 percent increase in sales in January, falling slightly short of a preliminary reading, amid tougher competition in the budget segment and from online-only players.
Esprit had said in October that its revenue fell 11.8 percent in local currency terms for the first quarter ended in September, with Germany falling 8.4 percent, the rest of Europe and North America sliding 11.9 percent, and Asia Pacific plunging 23.9 percent.
Shares of Esprit have risen 2.8 percent so far this year after a 29 percent drop in 2016. That compared to a 9.4 percent rise in the benchmark index so far in 2017. ($1 = 7.7608 Hong Kong dollars) (Editing by Anne Marie Roantree and Muralikumar Anantharaman)