By  on May 7, 2013

BERLIN — Esprit Holdings Ltd. issued a profit warning Tuesday, saying the group expects to record a substantial loss for the second half of the fiscal year ending June 30 relating to its business in China.

The Hong Kong-based group said there would be a good will impairment for the six-month period ended Dec. 31, relating to its acquisition of the remaining interests of associated companies in China. The impairment charge will be in the range of 1.8 billion to 2 billion Hong Kong dollars, or $213.9 million to $257.7 million at current exchange.

Moreover, Esprit attributed the expected loss to the closure of around 16 loss-making stores for an estimated cost of between 250 million to 300 million Hong Kong dollars, or $32.2 million to $38.7 million.

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In provisional figures also released Tuesday, Esprit reported a 7.9 percent dip in sales for the third quarter ended March 31 to $6.72 billion Hong Kong dollars, or $865.8 million at an average exchange rate for the period.

The group’s retail sales were down 7.1 percent in the quarter, while its wholesale business dropped 8.8 percent. While it did not issue figures, Esprit said the group’s gross profit margin for the quarter recorded a slight decline year-on-year due to promotional activities and wholesale support measures.

For the nine months ended March 31, total sales were down 15.5 percent, with women’s casualwear, which makes up 30 percent of sales, booking the deepest declines of 26.3 percent.

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