Hong Kong: Esprit Holdings, the world’s No.5 fashion retailer, posted its first profit decline in a decade in the first half of 2008-09 as a global economic crisis gripped its key markets in Europe and Asia.
July-December net profit fell to HK$2.85 billion ($365.8 million), a 13% decline from the HK$3.29 billion posted in the same period of the previous year.
Three analysts polled by Reuters had expected a fall of between 1 and 14% in profits, with Deutsche Bank predicting a 14% drop to HK$2.8 billion ($359 million).
The Europe-focused apparel retailer, which derives half its revenue from Germany alone, has been hurt by a recession in Europe’s largest economy as well as a sharp slowdown in Asia, with Japan, Hong Kong and Singapore all in recession.
Esprit’s earnings are not expected to recover until the next financial year, but analysts say it may emerge more resilient than other cheap and chic fashion retailers such as Hennes & Mauritz and Inditex because of a diversified price range.
Esprit shares fell 45% in July-December, underperforming a 35% drop in the benchmark Hang Seng stock index.