BEIJING — Esprit is saying goodbye to the Australian and New Zealand markets, the company’s first big pivot since revealing a plan to replace its chief executive officer and restructure its management team.
The company said Thursday it is to sell its loss-making operations in the region, which is expected to have a negative impact on the results for the full financial year ending June 30. Esprit intends to close 67 directly managed retail stores, including 38 concession counters in department stores and 13 outlets.
The change comes during a shuffle at the top of the brand. Esprit announced the departure of its ceo, José Manuel Martínez Gutiérrez, in March, with former New Look boss Anders Kristiansen to take over the role effective June 1.
“Divesting the ANZ operations will allow management to concentrate efforts and resources in developing other markets in Asia (e.g. China, Hong Kong, Taiwan, Singapore and Malaysia) with profitable growth opportunities for the future, and avoid incurring further losses from our non-performing operations in Australia and New Zealand,” Esprit said.
For the financial year ended June 30, Australia and New Zealand contributed 297 million Hong Kong dollars to the group’s revenue, representing less than 2 percent of the total. However, the divestment will result in one-off costs in the range of 150 million to 200 million Hong Kong dollars for the provision of store closures and impairment of stores’ assets.
“It is expected to have a negative impact on the results for the full financial year ending June 30, 2018,” Esprit said.
In its most recent set of earnings reported on May 2, revenue for the nine months ended March 31 was 11.8 billion Hong Kong dollars, a decline of 10.9 percent year-over-year, as its total controlled space shrunk 9.2 percent. In the third quarter, its retail operations, excluding online sales, recorded revenue of 1.4 billion Hong Kong dollars, down 17.1 percent from a year ago in local currency terms.
“Performance in 3Q FY17/18 was well below the group’s expectation, which reinforces our decision to accelerate the implementation of key strategic initiatives in order to improve top line performance and further reduce operational expenses,” the brand said.