Esprit profit warning comes as store traffic "subsides"
Struggling Hong Kong-listed retailer Esprit has issued a profit warning on the back of the COVID-19 outbreak.
It said this week that measures implemented in a number of countries around the world have resulted in the closure of a significant number of stores, especially impacting its business in Europe.
It said "apparel retail sentiment is at its lowest level possible and store traffic in the group’s retail stores and its partners’ points of sale has subsided entirely".
And unlike some retailers that have said their supply chains haven't been too badly affected so far, it added that "the logistics of the supply chains of merchandise shipments are significantly affected”.
It now expects the pandemic to "significantly adversely impact" its sales in the second half of the financial year that ends on June 30. As a result, it also expects to incur "a considerable loss" in the half. However, it couldn't say exactly what that loss would be given the current uncertainty.
It's slightly worrying as well that, unlike many others in a similar situation, it didn't include a statement about how confident it feels for the group's prospects longer term. But that's perhaps no surprise given that it has been struggling for some time with a turnaround that has proved elusive so far.
In the year to June 30 2019, its results were better than expected, but it still made a net loss of HK$2.14bn (£219m/€248m/US$274m). Revenue was higher than analysts had predicted but still came in at a year-on-year drop to HK$12.9bn from HK$15.4bn.
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