Europe loses economic spirit – Espirit loses $ 60 million

Boston, MA 02/28/2013 (wallstreetpr) – The Hong Kong-based Esprit Holdings Limited (HKG:0330) has posted larger than estimated losses of $60 million resulted by Europe’s weakening consumer demand. According to the statement that Espirit made its revenue dropped to HK$13.6 billion by 19 percent which was far greater than estimates made by analysts. Close to 78 percent of Esprit Holdings Limited (HKG:0330) sales came from Europe and the company has invested heavily in store upgrades and advertising campaigns. It has been facing heavy competition from much bigger rivals like Fast Retailing Co Ltd (TYO:9983), H & M Hennes & Mauritz AB (STO:HM-B) and Inditex SA (ITX)’s Zara.

Various detrimental factors

Esprit Holdings Limited (HKG:0330) is desperately trying to revive its brand. The company stated that though the transformation plan is helping it make progress it will be a while before there is a tangible improvement in its operational results. The translation will take some time to be more evident. Consumer sentiment had been dampened by the Eurozone crisis and trading conditions in the region had been affected badly. The company sales were impacted negatively by its North American store closures as well as the Euro weakening against the Hong Kong dollar in the period compared to last year. On Feb 22 the European Commission said that the Euro-economy is going to shrink further this year and the government, companies as well as consumers will automatically be curbing spending.

Top executives leave

In June 2012, Esprit Holdings Limited (HKG:0330) lost two of its top executives over a period of 48 hours. CEO Ronald Van der Vis quit and so did Hans Joachim Koerber. The success of the transformation plan that the company has laid out has thus come under a shroud. Esprit Holdings Limited (HKG:0330) is planning on spending $2.3 billion across four years on creating a greater presence in China and on additional marketing efforts.

Shares of Esprit Holdings Limited (HKG:0330) went down by 0.59% to close at $10.04

Shares of H & M Hennes & Mauritz AB (STO:HM-B) were steady at $230.30

Shares of Fast Retailing Co Ltd (TYO:9983) went up by 2.85% to close at $25280.00

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