Consumer China

Esprit – still struggling to locate the Chinese spirit

  • Published 03 Nov 2011

Esprit lacks the draw of rival brands but tends to be priced higher, however, popularity in first-tier cities is improving.

Esprit (0330:HKG) is hoping that one step backwards will help take the group two steps forwards by 2015. A closure of operations in some European and North American markets on poor performance led to restructuring costs that halved fiscal 2011 profits. And even without such costs, earnings were down 30% YoY as an accumulated lack of investment in marketing and development has stilted growth. The group hopes that increased investment in advertising and aggressive expansion in China will help turn the business around, though recent store visits across China suggest the group has some way to go. We expect revenues to continue to show mild declines in fiscal 2012 as restructuring continues. Margins, however, may remain suppressed for some time.

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