Esprit Holdings (0330) plans to invest HK$800 million to boost its retail business after net profit slumped 26.4 percent - its first annual earnings decline in at least a decade - as the clothing retailer's major European markets fell into recession.
"Don't expect, for the coming year, any miracles," chairman Heinz Krogner told reporters yesterday.
Net income for the year ended June 30 declined to HK$4.745 billion from HK$6.45 billion the previous year.
Earnings per share were HK$3.81, down from HK$5.21. Dividend per share totaled HK$2.85.
Turnover dropped 7.4 percent to HK$34.49 billion after its wholesale business - which accounts for 52 percent of revenues - tumbled 14.5 percent, as customers rationalized orders due to market uncertainties, reduction in credit insurance, and the bankruptcy of several major department stores. "We see continued weakness in the wholesale order book in the first half of this financial year," the company warned in a statement.
Esprit said it aims to open 60 to 80 new stores, after adding 104 last year to bring the total to 801 at June 30 with selling space exceeding 313,000 square meters. The network of franchise stores could expand by up to 140 from the current 1,551 stores by end-June 2010.
The international fashion chain said it plans to invest HK$650 million this year on a worldwide IT system upgrade, and to open a new distribution center in Europe in partnership with a logistical service provider.
Geographically, Esprit derived 85.3 percent of total revenues from its European markets, but the HK$29.42 billion generated represented a decline of 8.9 percent from the previous year. Meanwhile, its Asia Pacific revenues rose 3.6 percent to HK$4.22 billion, while its North America segment slipped 1.5 percent to HK$845 million.
Esprit shares climbed 3.2 percent to close at HK$59.90 yesterday before the results announcement.
